8-K

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549


                                    FORM 8-K


                                 CURRENT REPORT
     PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

       Date of report (Date of earliest event reported): November 5, 2004


                              TERRA INDUSTRIES INC.
             (Exact name of registrant as specified in its charter)



           Maryland                      1-8520                  52-1145429
(State or other jurisdiction    (Commission File Number)       (IRS Employer
     of incorporation)                                       Identification No.)

                                  Terra Centre
                        600 Fourth Street, P.O. Box 6000
                           Sioux City, Iowa 51102-6000
                                 (712) 277-1340
          (Address of Principal Executive Offices, including Zip Code)
              (Registrant's Telephone Number, Including Area Code)


Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)

|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
    (17 CFR 240.14a-12)

|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
    Act (17 CFR 240.14d-2(b))

|_|  Pre-commencement communications pursuant to Rule 13e-4(c) under the
     Exchange Act (17 CFR 240.13e-4(c))








ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES

         On November 5, 2004, Terra Industries Inc. (the "Company") announced
that the initial purchasers of its 4.25% Series A cumulative convertible
perpetual preferred shares ("Series A Preferred Shares") have exercised their
option to purchase an additional $20 million, or 20,000, of the Series A
Preferred Shares. The sale of the Series A Preferred Shares closed on November
10, 2004. A copy of the press release is filed herewith as Exhibit 99.1. The
Company estimates net proceeds from the offering of approximately $19.3 million
(after deducting the initial purchasers' discount of 3.5%, plus related
expenses). Proceeds from this sale will be used for general corporate purposes.
The Series A Preferred Shares were sold within the United States only to
qualified institutional buyers in reliance on Rule 144A under the Securities Act
of 1933, as amended (the "Securities Act"), and outside the United States only
to non-U.S. persons in reliance on Regulation S under the Securities Act.

         The Series A Preferred Shares are not redeemable by the Company and may
be converted at any time, at the option of the holder, into 100.4016 common
shares of the Company. On or after December 20, 2009, the Company may cause the
Series A Preferred Shares to be automatically converted into that number of
common shares that are issuable at the then prevailing conversion rate only if
the closing price of the Company's common shares exceeds 140% of the then
prevailing conversion price for 20 trading days during any consecutive 30
trading day period. The holders of the Series A Preferred Shares may require the
Company to purchase all or part of the shares held by them upon a "Fundamental
Change" (as defined in the Articles Supplementary for the Series A Preferred
Shares) for an amount equal to 100% of the liquidation preference of the Series
A Preferred Shares to be repurchased, plus accrued and unpaid dividends.

         At anytime after the date of issuance, subject to certain restrictions,
the Company has the right to require the holders of the Series A Preferred
Shares to exchange such shares for convertible subordinated debentures having an
aggregate principal amount equal to the aggregate liquidation preference of the
Series A Preferred Shares and having a conversion rate and interest rate
substantially identical to the conversion rate and dividend rate for the Series
A Preferred Shares. The convertible subordinated debentures mature on the
thirtieth anniversary of the exchange date.

         For additional information regarding the Series A Preferred Shares,
including a copy of the Articles Supplementary, and convertible subordinated
debentures, see the exhibits to the Company's Form 10-Q filed on November 9,
2004.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.

          (c)      Exhibits

                   99.1     Press Release issued November 5, 2004.




                                   SIGNATURES

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                                             TERRA INDUSTRIES INC.


                                             /s/ Mark A. Kalafut
                                             -----------------------------------
                                             Mark A. Kalafut
                                             Vice President, General Counsel and
                                             Corporate Secretary


Date: November 10, 2004

EX-99.1

[logo]                                                     Terra Industries Inc.
TERRA                                                         600 Fourth Street
                                   Exhibit 99.1                    P.O. Box 6000
                                                       Sioux City, IA 51102-6000
                                                       Telephone: (712) 277-1340
                                                         Telefax: (712) 277-7383
                                                         www.terraindustries.com
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                                      NEWS
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For immediate release                                    Contact: Mark Rosenbury
                                                                  (712) 279-8756


           INITIAL PURCHASERS EXERCISE OPTION TO PURCHASE $20 MILLION
                       OF TERRA SERIES A PREFERRED SHARES


Sioux City, Iowa (Nov. 5, 2004)--Terra Industries Inc. (NYSE symbol: TRA)
announced today that initial purchasers have exercised their option to purchase
$20 million of Series A cumulative convertible perpetual preferred Terra shares.
The sale of the preferred shares is expected to close on Nov. 10, 2004. Terra
will use the sale proceeds for general corporate purposes.


The option was granted with Terra's private sale of $100 million of the Series A
preferred shares on Oct. 15, 2004.


The preferred shares pay dividends, in cash or common shares at the company's
option, at a rate of 4.25% per annum. The preferred shares are convertible into
Terra common shares at a conversion rate of 100.4016 common shares per preferred
share, which is equivalent to an initial conversion price of $9.96 per common
share, subject to adjustment. Terra may also exchange the preferred shares for
convertible subordinated debentures.


The preferred shares have not been registered under the Securities Act and may
not be offered or sold in the United States absent registration or an applicable
exemption from registration requirements of the Securities Act.


Terra Industries Inc., with 2003 revenues of $1.4 billion, is a leading
international producer of nitrogen products.


This news release may contain forward-looking statements, which involve inherent
risks and uncertainties. Statements that are not historical facts, including
statements about Terra Industries Inc.'s beliefs, plans or expectations, are
forward-looking statements. These statements are based on current plans,
estimates and expectations. Actual results may differ materially from those
projected in such forward-looking statements and therefore you should not place
undue reliance on them. A non-exclusive list of the important factors that could
cause actual results to differ materially from those in such forward-looking
statements is set forth in Terra Industries Inc.'s most recent report on Form
10-K and Terra Industries Inc.'s other documents on file with the Securities and
Exchange Commission. Terra Industries Inc. undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result of new
information, future developments or otherwise.


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