Terra Board Comments On CF Industries’ Latest Approach

Terra Industries Inc. has said CF Industries Holdings, Inc.’s recent proposed merger agreement to Terra contains the same economic terms as its proposal from November 1, together with a 30-day “go shop” provision subject to a break-up fee and expense reimbursement. Terra’s Board of Directors previously rejected CF’s proposal as financially inadequate, and has once again concluded that the proposed merger agreement does not provide any basis for engagement with CF.

• Plus: CF Industries’ Director Nominees Elected To Terra Board

During the weeks leading up to the Annual Meeting, Terra shareholders, including those who voted for CF, delivered a consistent message to Terra’s Board and management team that CF’s proposal to acquire Terra for $24.50 in cash and 0.1034 of a share of CF common stock is inadequate. At Terra’s Annual Meeting, it appears that only 38% of the outstanding shares unaffiliated with CF voted in favor of CF’s nominees. Excluding the approximately 7% of Terra’s outstanding shares that are owned by CF, the preliminary voting results indicate that CF’s nominees were elected by a very narrow margin of approximately 2%, underscoring the absence of any mandate for CF’s inadequate proposal.

“As I said at our Annual Meeting, our shareholders have provided us with many differing perspectives and we welcome that input and will take all views into account,” says Michael Bennett, Terra President and Chief Executive Officer. “Nothing about the vote changed the value of CF’s proposal. We continue to believe that Terra’s current strategy, which capitalizes on our attractive product mix, diversified customer base and geographic advantages, will deliver greater value than CF’s proposal. Accordingly, our focus continues to be executing on our strategy to deliver results for Terra shareholders.”

Terra is well-positioned to benefit significantly from an expected upsurge in demand for nitrogen as the economic recovery continues. Terra’s 2010 EBITDA estimate of $694 million underscores Terra’s strong prospects, and the inadequacy of CF’s latest proposal. Year-to-date, Terra’s share price has appreciated approximately 130%. The entire fertilizer sector – and Terra in particular – will benefit from an anticipated strong growing season, strengthening corn and nitrogen prices and moderate gas costs. Terra shareholders will receive their $7.50 per share special cash dividend on December 11, and Terra remains committed to returning profits to shareholders in the form of dividends and buybacks. Over the past four years, Terra has returned more than $1 billion to shareholders in this manner.

Once the election results are certified, Terra’s Board will welcome three new directors, John N. Lilly, David A. Wilson, and Irving B. Yoskowitz. In addition, the Board, by unanimous vote of the directors whose terms do not expire this year, has taken steps to expand to eleven members, to be effective at that time, so that Terra’s three highly-qualified and experienced independent directors, Martha O. Hesse, Dennis McGlone and Henry R. Slack, will continue to serve on the Board. The Board believes that Terra’s shareholders will benefit the most by combining this experience with the new perspective of the three additions to the Board.

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