Terra Industries To Pay $750 Million In Special Dividend; Raise $600 Million

   DOW JONES NEWSWIRES 
 

Terra Industries Inc. (TRA) said it will pay a total of $750 million to shareholders through a special cash dividend and plans to raise up to $600 million through a debt financing as the fertilizer company looks to improve its balance sheet.

In addition, Terra will launch a tender offer to buy its senior notes due in 2017. The price is equal 104.5% of the original amount.

Amid a three-way struggle for power in the fertilizer industry, Terra has refused a $3.71 billion bid from rival CF Industries Holdings Inc. (CF), which is the subject of its own $3.7 billion takeover attempt by Agrium Inc. (AGU).

In August, CF raised its stock offer to the equivalent of $37.20 a share, more than double the price at which Terra's shares traded before CF first announced its takeover plan.

CF has repeatedly rejected Agrium's approaches in favor of a deal for Terra. Terra likewise has repeatedly said no to CF, which launched its effort at the start of the year.

The fertilizer industry has struggled, because farmers cut back purchases this year after a sharp drop in prices for their products and broader economic problems.

On Thursday, CF said, "We remain committed to a business combination with Terra Industries, and are reviewing their latest announcement."

In announcing the special dividend of $7.50 a share, Terra Chief Executive Michael Bennett said it "offers shareholders significant additional value for their investment in Terra."

The company expects to make the payouts in the fourth quarter, but they are subject to the completion of the tender offer and debt financing and require consent of lenders.

"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," Bennett added.

After the tender offer, dividend payments and debt financing are completed, Terra would have about $500 million of cash.

Terra's shares rose 2.6% to $37.45 in after-hours trading. CF's were inactive after hours; they closed Thursday at $86.63. Agrium's shares fell 0.5% to $49.55 in after-hours trading.

-By Kathy Shwiff, Dow Jones Newswires; 212-416-2357; [e-mail]