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8-K - FORM 8-K - TERRA INDUSTRIES INC | c54470e8vk.htm |
Terra Industries Board of Directors Rejects
CF Industries Latest Proposal
CF Industries Latest Proposal
SIOUX CITY, IOWA (November 4, 2009) 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 CFs announced offer of $32.00 that
will be reduced by Terras 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 CFs latest proposal, the Board considered a number of factors, including the
following:
| CFs proposal significantly undervalues Terras near term and long term prospects, as illustrated by the following: |
| CFs 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 Terras projection of approximately $694 million. | ||
| Using CFs own proposed multiple of 6.7x1 Terras projected 2010 EBITDA would indicate an enterprise value of $4.65 billion. Applying CFs own adjustments, this would imply an equity value of $51.55 per share for Terra. | ||
| Alternatively, using CFs 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. |
| Terras 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. | ||
| Terras 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. |
1 | See CF Form 425 filed November 2, 2009 (page 5). | |
2 | CF has noted appropriate precedent transaction multiples for completed transactions of 8.2x (median) and 7.6x (mean). See CF Form 425 filed November 2, 2009 (page 6). |
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Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
NEWS from Terra Industries Inc. | November 4, 2009 |
| Terras 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 Terras Environmental Technologies business, which Terra expects to generate $400-500 million in DEF revenues by 2015. | ||
| Terras ability to continue to make strategic and opportunistic acquisitions that build shareholder value, such as Terras pending acquisition of a 50% interest in Agrium Inc.s (NYSE: AGU) Carseland nitrogen manufacturing facility and its acquisition of Mississippi Chemical Corporation. | ||
| Terras 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). |
CFs latest proposal fails to appropriately value Terras world class assets, strategic advantages
and prospects, said Terra President and CEO Michael Bennett. Terra is a preeminent pure play
nitrogen company, and through the continued execution of our strategy is well positioned to take
advantage of an upsurge in demand from our agricultural and industrial customer base as the
economic recovery continues.
Terras Board has a proven record of building Terras market position and delivering shareholder
value, said Henry R. Slack, Chairman of the Board of Terra. Terras Board and management team
always have and will continue to remain open to considering any bona fide opportunity to create
meaningful value for Terra shareholders.
Credit Suisse Securities (USA) LLC is serving as Terras financial advisor, and Cravath, Swaine &
Moore LLP and Wachtell, Lipton, Rosen & Katz are serving as legal counsel to Terra. MacKenzie
Partners, Inc. is serving as proxy solicitor for Terra.
About Terra
Terra Industries Inc., with 2008 revenues of $2.9 billion, is a leading North American producer and
marketer of nitrogen products.
Important Information and Where to Find It
On October 13, 2009, Terra filed with the Securities and Exchange Commission (the SEC) a
definitive proxy statement in connection with its 2009 Annual Meeting, and is mailing the
definitive proxy statement to its shareholders. Investors and security holders are urged to read
the definitive proxy statement relating to the 2009 Annual Meeting and any other relevant documents
filed with the SEC (when available), because they contain important information.
Page
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Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
NEWS from Terra Industries Inc. | November 4, 2009 |
Investors and
security holders may obtain a free copy of the definitive proxy statement and other documents that
Terra files with the SEC (when available) at the SECs Web site at www.sec.gov and Terras
Web site at www.terraindustries.com. In addition, the definitive proxy statement and other
documents filed by Terra with the SEC (when available) may be obtained from Terra free of charge by
directing a request to Terra Industries Inc., Attn: Investor Relations, Terra Industries Inc., 600
Fourth Street, P.O. Box 6000, Sioux City, IA 51102-6000.
Certain Information Concerning Participants
Terra, its directors, executive officers and certain employees specified in Annex A to Terras
definitive proxy statement for the 2009 Annual Meeting, which was filed with the SEC on October 13,
2009, are participants in the solicitation of Terras security holders in connection with its 2009
Annual Meeting. Security holders may obtain information regarding the names, affiliations and
interests of such individuals in Terras Annual Report on Form 10-K for the year ended December 31,
2008, which was filed with the SEC on February 27, 2009 and amended on April 28, 2009, and its
definitive proxy statement for the 2009 Annual Meeting. To the extent holdings of Terra securities
have changed since the amounts printed in the definitive proxy statement for the 2009 Annual
Meeting, such changes have been or will be reflected on Statements of Change in Ownership on Form 4
filed with the SEC. These documents (when available) may be obtained free of charge from the SECs
Web site at www.sec.gov and Terras Web site at www.terraindustries.com.
Forward-Looking Statements
Certain statements in this communication may constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are
based upon assumptions as to future events that may not prove to be accurate. Actual outcomes and
results may differ materially from what is expressed or forecasted in these forward-looking
statements. As a result, these statements speak only as of the date they were
made and Terra undertakes no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise, except as otherwise
required by law. Words such as expects, intends, plans, projects, believes, estimates,
and similar expressions are used to identify these forward-looking statements. In particular,
statements about Terras projected financial performance and Terras plans or intentions regarding
the completion of the Carseland acquisition and the benefits to Terra from such acquisition are
forward-looking statements and may not necessarily occur. Forward-looking statements are not
guarantees of future performance and involve risks, uncertainties and assumptions that are
difficult to predict. These risks, uncertainties and assumptions include, among others:
| the risk that the closing of the Carseland acquisition, which is conditioned on the completion of Agriums unsolicited bid for CF, may not occur, | |
| risks related to potential acquisition transactions, | |
| changes in financial and capital markets, |
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Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
NEWS from Terra Industries Inc. | November 4, 2009 |
| general economic conditions within the agricultural industry, | |
| competitive factors and price changes (principally, sales prices of nitrogen and methanol products and natural gas costs), | |
| changes in product mix, | |
| changes in the seasonality of demand patterns, | |
| changes in weather conditions, | |
| changes in environmental and other government regulation, | |
| changes in agricultural regulations and | |
| changes in the securities trading markets. |
Additional information as to these factors can be found in Terras 2008 Annual Report/10-K and in
Terras subsequent Quarterly Reports on Form 10-Q, in each case in the sections entitled
Business, Risk Factors, Legal Proceedings, and Managements Discussion and Analysis of
Financial Condition and Results of Operations, and in the Notes to the consolidated financial
statements.
This communication includes projected financial performance information from Terras 2010 financial
plan. These projections are necessarily based upon a variety of estimates and assumptions which,
through currently considered reasonable by Terra, may not be realized and are inherently subject,
in addition to the specific risks identified above, to business, economic, competitive, industry,
regulatory, market and financial uncertainties and contingencies, many of which are beyond Terras
control. There can be no assurance that the assumptions made in preparing the projected financial
performance information will prove accurate. Accordingly, actual results may differ materially
from the results projected.
Note: | Terra Industries news announcements are also available on its Web site, www.terraindustries.com. |
Additional Contacts:
Matthew Sherman/Jamie Moser
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
msherman@joelefrank.com/jmoser@joelefrank.com
Matthew Sherman/Jamie Moser
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449
msherman@joelefrank.com/jmoser@joelefrank.com
Larry Dennedy/Laurie Connell
MacKenzie Partners, Inc.
(800) 322-2885
terraproxy@mackenziepartners.com
MacKenzie Partners, Inc.
(800) 322-2885
terraproxy@mackenziepartners.com
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Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA
Terra Industries Inc. ¨ 600 Fourth Street ¨ P.O. Box 6000 ¨ Sioux City, Iowa 51102-6000
www.terraindustries.com ¨ 712/277-1340 ¨ NYSE Ticker: TRA