Terra Industries Issues Open Letter to Shareholders

The full text of the letter follows:

November 18, 2009
Dear Fellow Terra Shareholder:
Terra's Annual Meeting is just two days away - and your vote is
important. We urge you not to allow CF Industries to place three
of its nominees on your Board to advance CF's inadequate
acquisition proposal. Please re-elect three of Terra's
highly-qualified and experienced independent directors - Martha O.
Hesse, Dennis McGlone and our Chairman, Henry R. Slack, by voting
your WHITE proxy card TODAY.
DON'T SUPPORT CF'S INADEQUATE PROPOSAL --
DON'T ELECT CF'S THREE NOMINEES TO YOUR BOARD
Do not let CF take control of Terra without paying full and
fair value. As we have repeatedly stated, CF has had ten
months to put a compelling offer on the table, yet its latest
proposal continues to be inadequate, opportunistic and not in the
best interests of Terra shareholders.
CF's latest proposal of $32.00 in cash (including Terra's $7.50
per share special cash dividend) and 0.1034 shares of CF stock is
simply a low or no premium offer and in our opinion financially
inadequate by any reasonable measure.
For example, CF claims that 6.7x is a multiple reflecting an
appropriate change of control premium for Terra.(1)
Although we strongly disagree, applying this low multiple to
Terra's publicly announced 2010 EBITDA estimate of $694 million
yields an implied equity value for Terra of $48.97 per share -- a
price that is substantially higher than what CF is offering for
control of Terra.
As we have detailed in our materials, the three comparable past
transactions imply an EBITDA multiple of 7.6x the $694 million
2010 EBITDA estimate, which yields a price in excess of $55 per
share.
We believe it is no longer appropriate, nor is CF justified in,
using a stale earlier Street $525 million 2010 EBITDA estimate as
CF tries to self-servingly argue down our unaffected future stock
price to support its inadequate bid.
The future outlook for 2010 is clearly much brighter for Terra
today than at any time over the last 10 months since CF launched
its opportunistically low bid for Terra -- and we think the market
and our shareholders agree with us.
Terra shareholders deserve a board that will seek to obtain an
appropriate, meaningful control premium for your shares at the
right time. Don't help CF acquire Terra on the cheap.
And remember, you are going to receive very soon Terra's
previously declared $7.50 per share special cash dividend to be
paid in mid-December - $750 million that is already yours which CF
is including when it touts the cash component of its latest offer.
RE-ELECT TERRA'S DIRECTORS WHO ARE COMMITTED
TO SERVING THE BEST INTERESTS OF ALL TERRA SHAREHOLDERS
Your Board and management team have consistently acted in the best
interests of all Terra shareholders. Over the past four years,
your Board has returned to Terra shareholders more than $1 billion
in the form of share buybacks and dividends, including a $7.50 per
share special cash dividend which shareholders will receive in
December 2009. Your Board has been vigilant in the oversight of
its fiduciary duties and remains open to considering any bona fide
opportunity that creates meaningful value for all Terra
shareholders.
Terra is a preeminent "pure-play" nitrogen company. Our product
mix, diversified agricultural and industrial customer base and
geographic advantages position us to benefit from the economic
recovery and the expected surge in nitrogen demand. We are
confident that continued execution of Terra's strategy will
deliver greater value than CF's inadequate proposal, which fails
to appropriately value our world class assets, strategic
advantages and prospects.
PROTECT THE VALUE OF YOUR INVESTMENT -- VOTE TERRA'S WHITE
PROXY CARD TODAY
We urge you to vote Terra's WHITE proxy card TODAY by telephone
or Internet. If you have any questions on how to vote your
shares, please contact MacKenzie Partners, Inc. at (800) 322-2885
(Toll-Free) or at (212) 929-5500 (Collect).
We urge you to discard any blue proxy card you may receive from
CF.
Thank you for your continued support.

Sincerely,
/s/ Michael L. Bennett                    /s/ Henry R. Slack
Michael L. Bennett                        Henry R. Slack
President and Chief Executive Officer     Chairman of the Board

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. 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:

--
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.

This communication includes projected financial performance information
from Terra's 2010 financial plan. These projections are necessarily
based upon a variety of estimates and assumptions, including published
third-party forecasts for product selling prices and current
basis-adjusted Nymex natural gas futures prices, which, though 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
Terra's 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.

(1) See CF Form 425 filed November 2, 2009 (page 5).

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

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