New York, September 28, 2012 -- Moody's Investors Service revised the ratings outlook of Hunter Defense Technologies, Inc. ("Hunter") to negative from stable. Concurrently, Moody's affirmed all the company's ratings including the B2 corporate family rating ("CFR") and probability of default ratings.

The following ratings were affirmed (with updated LGD assessments):

Corporate Family Rating, at B2

Probability of Default Rating, at B2

$20 million first lien revolver (undrawn) due August 2013, at B1 (LGD-3, 39%) from (LGD-3, 40%)

$200 million first lien term loan ($161 million outstanding) due August 2014, at B1 (LGD-3, 39%) from (LGD-3, 40%)

$80 million ($54 million outstanding) second lien term loan due February 2015, at Caa1 (LGD-5, 89%)

RATINGS RATIONALE

The change in outlook to negative is based on the anticipated continued negative impact on the company's sales volumes and margins from U.S. defense budget pressures. Over 80% of the company's sales are to the U.S. government agencies, primarily the Army. The increased uncertainty regarding future military spending in the U.S. and ongoing contract funding delays have resulted in lower than anticipated EBITDA generation. The $55.7 million goodwill impairment charge recorded in the quarter ended June 30, 2012 is reflective of the expected continued negative effect of U.S. defense budget pressures on the company's operations over the intermediate term. In addition, although there are no further leverage ratio covenant step-downs in the company's credit agreements, covenant headroom is expected to remain tight. Recent debt prepayments have allowed the company to remain in compliance with covenants.

The B2 corporate family rating reflects the historically volatile nature of shelter sales counterbalanced by the high likelihood of ongoing long-term U.S. military demand for Hunter's technologically advanced mobile shelter systems and related products. Other factors underlying the B2 CFR include anticipated leverage in line with the rating category largely driven by the company's prudent use of free cash flow generation to repay debt (approximately $50 million of debt paid down since December 2011) and EBITDA margins sustained above 15%. Historically metrics were strong for the rating category but the impact of defense budget pressures and contract funding delays are expected to result in metrics more in line with the B2 rating category. These factors are weighed against limited revenue scale, customer concentration and potential for performance volatility from quarter to quarter due to the timing of orders and Department of Defense funding delays. Additionally, by prepaying a meaningful amount debt, the company has reduced its future amortization requirements but is expected to continue to use cash generation to pay down debt.

Hunter's ratings could be subject to downward revision if the company's liquidity position weakens or if debt is increased for large levered acquisitions or equity distributions in particular. Credit metrics that may result in a downgrade include EBIT/interest and retained cash flow/debt of 1.2x and 3%, respectively.

The rating outlook could be changed to stable if the company grows revenues and profitability in 2013 such that headroom under financial covenants meaningfully increases and Hunter continues to generate positive free cash flow. The ratings could be upgraded if the company is able to achieve and sustain EBIT/interest and retained cash flow/debt of 2.0x and in excess of 10%, respectively.

The principal methodology used in rating Hunter Defense Technologies, Inc. was the Global Aerospace and Defense Industry Methodology published in June 2010. Other methodologies used include Loss Given Default for Speculative-Grade Non-Financial Companies in the U.S., Canada and EMEA published in June 2009. Please see the Credit Policy page on www.moodys.com for a copy of these methodologies.

Hunter Defense Technologies, Inc., headquartered in Solon, OH, is a provider of tactical shelters, CBRN (chemical, biological, radiological, nuclear) filters and collective protective systems, and mobile power and temperature control equipment for the U.S. military and Homeland Security. Annual revenues approximate $300 million. Hunter Defense is majority owned by the private equity firm Metalmark Capital.

REGULATORY DISCLOSURES

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Please see ratings tab on the issuer/entity page on www.moodys.com for the last rating action and the rating history. The date on which some ratings were first released goes back to a time before Moody's ratings were fully digitized and accurate data may not be available. Consequently, Moody's provides a date that it believes is the most reliable and accurate based on the information that is available to it. Please see the ratings disclosure page on our website www.moodys.com for further information.

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Jadijhe (Gigi) Adamo Analyst Corporate Finance Group Moody'sInvestors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653Alexandra S. Parker MD - Corporate Finance Corporate Finance Group JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 Releasing Office: Moody's Investors Service, Inc.250 Greenwich StreetNew York, NY 10007 U.S.A. JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653(C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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