Fitch could lower Sequa

Fitch Ratings said it placed Sequa Corp. and its subsidiaries on Rating Watch negative following the announcement that the company will be acquired by the Carlyle Group for $2.7 billion. Sequa's issuer default rating is B+ and its senior unsecured notes are rated BB/RR2.

Warwick International Group Ltd., Chromalloy UK Ltd. and Chromalloy Holland BV's senior secured bank credit facility is rated BB+/RR1.

The negative Rating Watch reflects uncertainty regarding the final financing arrangements and potential changes to Sequa's capital structure and increased leverage, the agency said.

Sequa's ratings reflect the company's improving operating results, healthy commercial aerospace environment, liquidity, fully funded pension plans and highly diversified portfolio of subsidiaries, Fitch said.

A concern is the issuer's high leverage and negative free cash flow since 2002, driven by discretionary pension contributions and working capital needs for new business, the agency said.

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