Illinois Ag News Headlines Terra Industries Issues Open Letter to Shareholders Illinois Ag Connection - 11/20/2009 Two days before it's annual meeting, Terra Industries Inc., Sioux City, Iowa, issued an open letter to its shareholders. In it, Michael L. Bennett, president and CEO, along with Henry R. Slack, chairman of the board, asked shareholders not to support CF Industries, based in Illinois. "We urge you not to allow CF Industries to place three of its nominees on your Board to advance CF's inadequate acquisition proposal," the two wrote. "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." The letter went on to urge Terra shareholders to not allow CF to take control of Terra without paying full and fair value for the latter's stock. "As we have repeatedly stated, CF has had 10 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," the letter read. 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, the letter continued. For example, Terra alleges that 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," Bennett and Slack said. "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, the two men added. Bennett and Slack said that shareholders 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 theirs which CF is including when it touts the cash component of its latest offer. The letter went on to tell shareholders that its Terra 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," the letter continued. Bennett and Slack maintained that Terra is a preeminent "pure-play" nitrogen company. Its product mix, diversified agricultural and industrial customer base and geographic advantages position it to benefit from the economic recovery and the expected surge in nitrogen demand. The two men were 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. More from this state at: Illinois Ag Connection Copyright © 2010 - USAgNet.com. All Rights Reserved.