CF Industries Holdings, Inc. (NYSE: CF) today announced that its board of directors is prepared to increase CF Industries' offer for a business combination with Terra Industries Inc. (NYSE: TRA) to a fixed exchange ratio of 0.465 shares of CF Industries for each Terra common share. The proposal represents a premium of 35% over the exchange ratio on January 15, 2009, just prior to when the initial offer was made, and a 38% premium to the average exchange ratio over the one-year period prior to that offer.

The CF Industries board of directors also is prepared to return at least $1 billion of cash to stockholders of the combined company following the closing of the transaction, which likely would be accomplished through open market purchases or a self-tender offer. In addition, immediately prior to the consummation of the combination the Company would distribute an aggregate of five million contingent future shares to CF Industries stockholders. These contingent shares would be converted into CF Industries common stock should the stock trade at more than $115 per share over a specified period following the close.

"We continue to believe firmly that a business combination with Terra is the best way to create stockholder value and is in the best interests of both CF Industries and Terra stockholders," said Stephen R. Wilson, chairman, president and chief executive officer of CF Industries. "We believe that the return of cash will be extremely attractive to both sets of stockholders. The issuance of contingent shares provides an opportunity for existing CF Industries stockholders to benefit from upside performance in our stock. Once the premerger waiting period for the Terra transaction expires this evening under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, we will be in a position to close promptly following signing of a merger agreement."

CF Industries has had regular contact with Terra stockholders since making its initial proposal for a business combination in January. Based on these conversations, the company believes that the enhanced exchange ratio, the preservation of the all-stock transaction, and the addition of a cash component would be compelling to Terra stockholders.

CF Industries continues to expect the combination to generate $105 to $135 million in annual cost synergies by combining corporate functions and optimizing transportation and distribution systems, and through greater economies of scale in procurement and purchasing.

CF Industries also announced today that it has extended the expiration date of its exchange offer for all of the outstanding shares of Terra common stock until 5:00 p.m., Eastern time, Friday, August 21, 2009, unless further extended. The offer had been scheduled to expire at 5:00 p.m., Eastern time, on Friday, August 7, 2009. All other terms and conditions of the exchange offer remain unchanged. As of the close of business on August 4, 2009, a total of 9,144,017 shares of Terra common stock had been tendered into the exchange offer.

Source: CF Industries Holdings, Inc.