Terra Board of Directors Declares $7.50 per Share Special Cash Dividend

"Terra's Board is committed to enhancing value for all shareholders and over the past three years 35% of Terra's net income has been delivered to shareholders in the form of share repurchases and dividends," said Terra President and CEO Michael Bennett. "Through the special cash dividend, Terra will return an aggregate of approximately $750 million to shareholders. In addition to this special cash dividend, we recently announced an agreement to purchase a 50% interest in Agrium Inc.'s Carseland, Alberta, Canada nitrogen production assets and certain U.S. assets. These actions are further examples of the Board's commitment to providing shareholders with significant additional value for their investment in Terra."

Terra's common stock will begin trading without the special cash dividend and the regular dividend, on an ex-dividend basis, on December 14, 2009 (i.e., the first business day following the payment date). Shareholders of record on the record date who sell their shares on or before the payment date will lose their right to the special cash dividend and the regular dividend.

Based on its current estimates, the Company expects that approximately $1.00 to $1.50 of the special cash dividend will, for tax purposes, be classified as a return of capital. The tax character of the special cash dividend will be determined by the amount of earnings and profits for 2009, which will not be known until after the Company's books are closed effective December 31, 2009.

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. 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 SEC's Web site at www.sec.gov and Terra's 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 Terra's definitive proxy statement for the 2009 Annual Meeting, which was filed with the SEC on October 13, 2009, are participants in the solicitation of Terra's security holders in connection with its 2009 Annual Meeting. Security holders may obtain information regarding the names, affiliations and interests of such individuals in Terra's 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 SEC's Web site at www.sec.gov and Terra's 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 Terra's 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 Agrium Inc.'s unsolicited bid for CF Industries Holdings, Inc., may not occur,

-- risks related to potential acquisition transactions,

-- changes in financial and capital markets,

-- 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 Terra's 2008 Annual Report/10-K and in Terra's subsequent Quarterly Reports on Form 10-Q, in each case in the sections entitled "Business," "Risk Factors," "Legal Proceedings," and "Management's Discussion and Analysis of Financial Condition and Results of Operations," and in the Notes to the consolidated financial statements.

Note: Terra Industries' news announcements are also available on its Web site, www.terraindustries.com.

SOURCE: Terra Industries Inc.

Terra Industries Inc. 
Joe A. Ewing, 712-277-7305 
Vice President, Investor Relations 
jewing@terraindustries.com 
or 
Joele Frank, Wilkinson Brimmer Katcher 
Matthew Sherman/Jamie Moser 
212-355-4449 
msherman@joelefrank.com/jmoser@joelefrank.com 
or 
MacKenzie Partners, Inc. 
Larry Dennedy/Laurie Connell 
800-322-2885 
terraproxy@mackenziepartners.com