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;
Kathy.Shwiff@dowjones.com