TERRA INDS INC
			Symbol			TRA

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Terra Industries Board of Directors Rejects CF Industries’ Latest Proposal

2009-11-04 07:30 ET - News Release

SIOUX CITY, Iowa -- (Business Wire)

Terra Industries Inc. (NYSE: TRA) (“Terra”) today announced that its Board of Directors, with the advice of its financial and legal advisors, has carefully reviewed CF Industries Holdings, Inc.’s (NYSE: CF) latest proposal to acquire Terra for the equivalent of $24.50 in cash (which equals the net value of CF’s announced offer of $32.00 that will be reduced by Terra’s previously declared $7.50 per share special cash dividend) and 0.1034 of a share of CF common stock, and unanimously rejected it as inadequate, opportunistic and not in the best interests of Terra and its shareholders.

In rejecting CF’s latest proposal, the Board considered a number of factors, including the following:

• CF’s proposal significantly undervalues Terra’s near term and long term prospects, as illustrated by the following:
  • CF’s November 2, 2009 presentation justifies its inadequate proposal using a 2010 EBITDA estimate for Terra of $525 million, which is in fact significantly less than Terra’s projection of approximately $694 million.
  • Using CF’s own proposed multiple of 6.7x¹ Terra’s projected 2010 EBITDA would indicate an enterprise value of $4.65 billion. Applying CF’s own adjustments, this would imply an equity value of $51.55 per share for Terra.
  • Alternatively, using CF’s mean NTM EBITDA industry acquisition multiple of 7.6x² would imply an enterprise value of approximately $5.27 billion for Terra, which equates to $57.74 per share, a price which would still be substantially accretive to CF.
• Terra’s excellent near term outlook, particularly the strong fundamentals for nitrogen demand in the U.S. agricultural business in the coming growing season and moderate natural gas costs.
• Terra’s projected operating improvements in 2010, specifically revenue growth of more than 25% over 2009 and robust operating margins, which would result in EBITDA of $694 million for the year.
• Terra’s expansion of the UAN capacity at its Woodward facility, recognizing that UAN has been among the fastest growing nitrogen products in the United States.
• Significant upside in Terra’s Environmental Technologies business, which Terra expects to generate $400-500 million in DEF revenues by 2015.
• Terra’s ability to continue to make strategic and opportunistic acquisitions that build shareholder value, such as Terra’s pending acquisition of a 50% interest in Agrium Inc.’s (NYSE: AGU) Carseland nitrogen manufacturing facility and its acquisition of Mississippi Chemical Corporation.
• Terra’s track record of delivering value to its shareholders in the form of stock buybacks and dividends, which have amounted to over $1.0 billion over the last four years, including the $750 million to be paid to all Terra shareholders in December as a $7.50 per share special dividend ($1.00-$1.50 of which is estimated as a tax-free return of capital).

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