Preheat oven to 325 degrees F. Position oven rack in lower third of oven. Grease and flour 2-1/2-quart ovenproof glass bowl.
Combine cake mix, water, oil and eggs in large bowl. Beat with electric mixer on low speed 1 minute, then on medium speed for 3 more minutes. Pour batter into bowl.
Bake in 325 degree F oven in lower third of oven for 1 hour 20 minutes or until cake tester inserted in center of cake comes out clean. Cool cake in bowl on wire rack for 10 minutes. Invert cake on rack and remove bowl. Cool cake completely.
Combine sugar and 1 /2 cup water in medium-size saucepan. Bring to boiling over medium-high heat; boil until syrup reaches soft ball stage (240 degrees F on candy thermometer), 15 minutes.
Meanwhile, combine meringue powder and the 6 tablespoons water in small bowl. Beat on medium speed until soft peaks form. Slowly add hot sugar syrup, beating on high speed until frosting cools and is very thick, about 5 minutes.
Cut cake horizontally into thirds. Spread bottom layer with 3 /4 cup of frosting. Place middle layer on top; spread with 1 /2 cup frosting. Put top layer in place; frost entire cake with remaining frosting. Gently pat coconut on all sides. Garnish base of cake with peppermint candies if you wish. Makes 12 servings.
We prefer using meringue powder for uncooked frostings due to the increased concern of the presence of salmonella bacteria in raw eggs. Meringue powder is available in stores where decorating and baking supplies are sold.