Fitch Places Sequa's IDR and Senior Debt on Rating Watch Negative.

NEW YORK -- Fitch Ratings has placed Sequa Corporation (SQA) and its subsidiaries on Rating Watch Negative following the announced acquisition by The Carlyle Group, as follows:

Sequa Corporation:

--Issuer Default Rating (IDR) 'B+';

--Senior unsecured notes 'BB/RR2'.

Warwick International Group Ltd.

Chromalloy UK Ltd.

Chromalloy Holland B.V.

--Senior secured bank credit facility 'BB+/RR1'.

The ratings cover approximately $750 million of outstanding debt. The senior secured bank credit facility is an obligation of several of SQA's subsidiaries, and it is not an obligation of SQA and is not guaranteed by SQA.

The rating actions follow SQA's July 9 announcement that it has reached an agreement to be acquired by The Carlyle Group, a private equity firm, for approximately $2.7 billion. Under the terms of the agreement, Sequa has until Aug. 23, 2007 to solicit other bids from third parties. If consummated, the transaction is expected to close in the fourth quarter of 2007.

The Negative Rating Watch reflects uncertainty regarding the final financing arrangements and potential changes to SQA's capital structure which could meaningfully increase leverage. Possible changes in the company's operating and financial strategy are also a consideration. The Negative Rating Watch will be resolved following Fitch's assessment of these factors before or concurrent with the consummation or termination of the transaction.

Fitch notes that holders of both the 8.875% senior notes due 2008 ($199.1 million), and the 9.0% senior notes due 2009 ($498 million) benefit from change-of-control put provisions in the indentures which allow them to tender their notes at 101% of par. These provisions limit some of the credit risk related to the proposed transaction.

SQA's ratings reflect the company's improving operating results, healthy commercial aerospace environment, liquidity, and fully funded pension plans. SQA has a highly diversified portfolio of subsidiaries across products and geographies, reducing the concentration risk of individual operating businesses. Fitch's concerns are focused on high leverage and negative free cash flow since 2002 (driven by discretionary pension contributions and working capital needs for new business).

Fitch's Recovery Ratings (RR), introduced in 2005, are a relative indicator of creditor recovery on a given obligation in the event of a default. A broad overview of Fitch's RR methodology as it relates to specific sectors, including a Case Study webcast, can be found at www.fitchratings.com/recovery.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.