S&P rates Marquee notes

Standard & Poor's said it assigned its B corporate credit rating to Marquee Holdings Inc. and its subsidiary, Marquee Inc., revised its outlook on movie exhibitor AMC Entertainment Inc. to stable from positive based on the increased leverage that will result from the pending sale and recapitalization of the company and affirmed its ratings, including its B corporate credit rating on the company.

Upon completion of the sale of AMC, Marquee Inc. will be merged with AMC. All of these companies are analyzed on a consolidated basis.

S&P also assigned B- ratings to Marquee Inc.'s proposed $150 million in senior unsecured notes due 2012 and its proposed $305 million in senior unsecured floating-rate notes due 2011 and a CCC+ rating to Marquee Holdings' proposed $170 million senior discount notes due 2014.

Proceeds from the new debt issues, about $335 million in existing cash, the rollover of about $750 million in existing debt and capital leases and a $785 million cash equity contribution will be used to fund the purchase by funds controlled by J.P. Morgan Partners and Apollo Management LP.

S&P said the ratings on AMC reflect its financial risk from its heavy reliance on expensive lease financing which results in high lease-adjusted leverage and fixed costs, its weak EBITDA margins and its exposure to the mature and competitive U.S. motion picture exhibition industry.

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