S&P affirms Knowledge Learning

Standard & Poor's said it affirmed its ratings on Knowledge Learning Corp., including the B+ corporate credit rating and the B- rating on the company's $260 million of senior subordinated notes due in 2015.

The outlook is negative.

The affirmation follows the company's announcement that it has separated its child care services operations from its real estate operations by transferring substantially all of its owned real estate to unrestricted subsidiaries.

The ratings on the company overwhelmingly reflect the company's heavy debt burden. It dramatically increased in size with the January 2005 acquisition of KinderCare Learning Centers Inc. and added a significant debt burden, highlighting the company's aggressive growth, S&P said.

The ratings also reflect the company's narrow operating focus in the child care services sector and the difficult operating environment in this field, S&P said.

These concerns are only partially mitigated by the company's strong liquidity for its rating category, its leading position in a highly fragmented industry and its diversification across more than 2,000 facilities in 39 states in the United States, S&P said.

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