Terra Industries Inc. today announced that it plans to return an aggregate of approximately $750 million in cash to shareholders through a special cash dividend of $7.50 per share, expected to be declared and paid in the fourth quarter of 2009.

Terra also announced that Terra Capital, Inc. is commencing a tender offer and consent solicitation to purchase any and all outstanding 7.00% Senior Notes due 2017 of the Company (the "2017 Notes") for cash at a price equal to 104.5% of par, including a consent fee. In addition, Terra plans to raise up to $600 million of capital through a debt financing.

"Terra's Board is focused on delivering value to our shareholders, and the special dividend offers shareholders significant additional value for their investment in Terra," said Terra President and CEO Michael Bennett. "The stabilization in financial markets allows us to recalibrate our balance sheet while positioning Terra to continue to take advantage of opportunities to acquire assets that complement our business strategies."

After giving effect to the tender offer and special dividend, and assuming a debt financing of $600 million, Terra would have approximately $500 million of cash, net of prepayments.

Declaration and payment of the special dividend will be subject to the successful completion of the tender offer and debt financing, as well as obtaining the requisite consent of lenders under Terra Capital, Inc.'s existing credit facility. Completion of the tender offer and consummation of the debt financing will also be subject to obtaining such lender consent.

The tender offer also is subject to other customary conditions, including a minimum tender condition of a majority in principal amount of the 2017 Notes, as described in the offer to purchase and the related materials that will be distributed to holders of the 2017 Notes.

None of Terra, its Board of Directors, the dealer manager or the information agent is making any recommendation to Terra noteholders as to whether to tender or refrain from tendering their 2017 Notes. The dealer manager for the tender offer is Credit Suisse Securities (USA) LLC. The information agent for the tender offer is MacKenzie Partners, Inc. and the depositary for the tender offer is U.S. Bank National Association.

This announcement is for informational purposes only and does not constitute the commencement of any offer, an offer to purchase, or a solicitation of an offer to sell the 2017 Notes. The solicitation of offers to buy the 2017 Notes will only be made pursuant to the offer to purchase, to be issued in connection with the launch of the tender offer (as such offer to purchase may be amended or supplemented), the related letter of transmittal and other related documents that Terra is sending to its noteholders. The tender offer materials contain important information that should be read carefully before any decision is made with respect to the tender offer. Those materials will be distributed by Terra to its noteholders at no expense to them.

The contemplated debt financing will not be registered under the Securities Act of 1933 (the "Securities Act") or any state securities laws and, unless so registered, may not be offered or sold in the United States except pursuant to an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

Source: Terra Industries