New York, September 19, 2012 -- Moody's Investors Service downgraded Production Resource Group, Inc.'s Corporate Family Rating ("CFR") and Probability of Default Rating ("PDR") to B3 from B2, and the rating on its 8.875% Senior Unsecured Notes due 2019 to Caa1 from B3. These actions reflect Moody's view that a soft macroeconomic environment in Europe and an acquisitive financial philosophy likely will prevent the company from improving its operating performance enough to return credit measures to levels appropriate for a B2 CFR. The rating outlook is stable.

PRG has implemented an operational restructuring program to improve the performance of its European business, but Moody's believes the cost savings will not be sufficient to offset the effects of reduced demand and lower pricing. Consequently, there is unlikely to be meaningful improvement from lease-adjusted interest coverage in the 1 times (EBITDA-CapEx)/Interest range, and free cash flow will likely be negative in 2012. The business is quite capital intensive relative to most other rated peers in the business and consumer service industry due to an ongoing need to replace rental equipment, though spending could be lowered from current levels for a short time to help manage free cash flow. Nevertheless, Moody's does not anticipate PRG will generate meaningful and sustainable free cash flow absent an improvement in underlying business conditions.

Today's Actions:

..Issuer: Production Resource Group Inc.

.... Corporate Family Rating, Downgraded to B3 from B2

.... Probability of Default Rating, Downgraded to B3 from B2

.... 8.875% $400 million Senior Unsecured Notes due 2109, Downgraded to Caa1 (LGD4 69%) from B3

RATINGS RATIONALE

The B3 CFR is principally constrained by weak credit metrics for the rating category, including weak interest coverage and historically negative free cash flow, and an aggressive financial philosophy that has included a number of debt-funded acquisitions. The rating also reflects concerns related to a highly-competitive environment, ongoing capital needs, and vulnerability to changes in macroeconomic conditions. Good market positions, low customer concentration, and high geographic diversity help mitigate these fundamental business risks. The rating also benefits from a significant level of financial support provided by PRG's private equity sponsor during the most recent downturn. However, given the company's weak coverage and negative free cash flow, an adequate liquidity position supported by over $90 million of availability under an asset-based revolving credit line is the principal supporting factor for the company's B3 CFR.

The stable outlook reflects Moody's view that an adequate liquidity position provides PRG with sufficient flexibility to withstand the soft macroeconomic environment in the near-term. The B3 rating assumes PRG will generate negative free cash flow at least through 2012 and credit measures will remain relatively weak for the rating category over the next 12-18 months, but the company will maintain at least $50 million of covenant-adjusted revolver availability.

Moody's could downgrade the ratings in anticipation of substantive erosion in the company's liquidity position, worsening business conditions in Europe, or financial leverage exceeding 7 times. Conversely, an upgrade is unlikely absent a sustained improvement in credit measures. Moody's could take a positive action if the company reduces its leverage to below 5 times, improves interest coverage to above 1.5 times, starts to generate free cash flow-to-debt in the low single digit range. A positive action would require a solid liquidity cushion and an expectation for a sustained reduction in revolver borrowings.

The principal methodology used in rating Production Resource Group was the Global Business & Consumer Service Industry Rating Methodology published in October 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.

Production Resource Group, Inc. is a provider of entertainment technology solutions to the live event industry. The company is majority-owned by The Jordan Company (The Resolute Fund II). PRG reported $619 million of revenue for the twelve months ended June 30, 2012.

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Benjamin Nelson 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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