8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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): October 16, 2009

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 Number)

Terra Centre
600 Fourth Street, P.O. Box 6000
Sioux City, Iowa	51102-6000
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (712) 277-1340 

(Former name or former address, if changed since last report.)

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:

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

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

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

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

TABLE OF CONTENTS

EX-4.1

EX-99.1

ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT

          On October 16, 2009, Terra Capital, Inc. (“Terra Capital”), a wholly owned subsidiary of Terra Industries Inc. (“Terra”), the guarantors named therein and U.S. Bank National Association, the trustee under the Indenture (as hereinafter defined) (the “Trustee”), executed a Third Supplemental Indenture (the “Third Supplemental Indenture”) supplementing the Indenture dated as of February 2, 2007 (as amended, supplemented, waived or otherwise modified, the “Indenture”), by and among Terra Capital, the guarantors named therein and the Trustee, pursuant to which Terra Capital issued the 7.00% Senior Notes due 2017 (the “2017 Notes”). The Third Supplemental Indenture will amend the terms of the Indenture in the manner set forth in Terra Capital’s offer to purchase and consent solicitation materials dated as of September 24, 2009, as amended. However, the amendments will not become operative unless and until the 2017 Notes tendered by the consenting holders are accepted for purchase pursuant to the terms of the tender offer for the 2017 Notes, which is expected to occur on or about October 27, 2009. If the tender offer for the 2017 Notes is terminated or withdrawn, the amendments will not become operative. Once operative, the amendments will eliminate substantially all of the Indenture’s principal restrictive covenants and certain events of default and would significantly amend certain other provisions contained in the Indenture.

          A copy of the Third Supplemental Indenture is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference. The description of the material terms of the Third Supplemental Indenture is qualified in its entirety by reference to such exhibit.

ITEM 8.01 OTHER EVENTS

          On October 16, 2009, Terra issued a press release announcing that Terra Capital has received the requisite consents for the tender offer and consent solicitation for any and all of the 2017 Notes.

          A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(d) Exhibit

       4.1 Third Supplemental Indenture, dated as of October 16, 2009, by and among Terra Capital, Inc., Terra Industries Inc., each of the subsidiary guarantors listed in Appendix I thereto and U.S. Bank National Association, as trustee.

       99.1 Press release of Terra Industries Inc., issued October 16, 2009.

SIGNATURES

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

TERRA INDUSTRIES INC.
By:	/s/ John W. Huey
Name:	John W. Huey
Title:	Vice President, General Counsel and Corporate Secretary

Date: October 16, 2009

EXHIBIT INDEX

Exhibit
Number	Description
4.1	Third Supplemental Indenture, dated as of October 16, 2009, by and among Terra Capital, Inc., Terra Industries Inc., each of the subsidiary guarantors listed in Appendix I thereto and U.S. Bank National Association, as trustee.
99.1	Press release of Terra Industries Inc., issued October 16, 2009.

EX-4.1

Exhibit 4.1

THIRD SUPPLEMENTAL INDENTURE

          This Third Supplemental Indenture (the “Third Supplemental Indenture”) is made and entered into this 16th day of October, 2009 by and among Terra Capital, Inc., a Delaware corporation (the “Company”), Terra Industries Inc., a Maryland corporation, as parent guarantor (the “Parent”), each of the subsidiaries of the Company listed in Appendix I attached hereto (each, together with the Parent, the “Guarantors”) and U.S. Bank National Association, as trustee under the Indenture referred to below (the “Trustee”).

WITNESSETH

          WHEREAS, the Company, the Guarantors and the Trustee are parties to an Indenture (as such may be amended from time to time, the “Indenture”), dated as of February 2, 2007, as supplemented by the First Supplemental Indenture dated as of January 9, 2008, and the Second Supplemental Indenture dated as of April 27, 2009, relating to the Company’s 7% Senior Notes due 2017 (the “Notes”);

          WHEREAS, pursuant to its offer to purchase and consent solicitation statement dated September 24, 2009 (the “Offer to Purchase”), the Company commenced a tender offer for any and all of the outstanding Notes (the “Tender Offer”) and solicited the consents of the holders of the Notes to the Proposed Amendments (the “Consent Solicitation”);

          WHEREAS, the approval of the holders of a majority of the aggregate principal amount of the Notes outstanding (not including any Notes owned by the Company or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Parent) is sufficient to amend the terms of the Indenture as set forth herein;

          WHEREAS, having received the approval of the holders of at least a majority of the aggregate principal amount of the Notes outstanding (not including any Notes owned by the Company or by any person directly or indirectly controlling or controlled by or under direct or indirect common control with the Parent) pursuant to Section 9.2 of the Indenture, the Company and the Trustee desire to amend the Indenture, as provided hereinafter; and

          WHEREAS, all things necessary to make this Third Supplemental Indenture the legal, valid and binding obligation of the Company, the Parent and the Guarantors, upon its execution, have been done;

          NOW, THEREFORE, for good and valuable consideration, the receipt of which is acknowledged, the parties agree as follows for the benefit of each other and for the equal and ratable benefit of the holders of the Notes:

          1. Capitalized Terms. Capitalized terms used herein without definition shall have the meanings assigned to them in the Indenture.

          2. Deletion of Certain Provisions. Each of the following sections of the Indenture is hereby deleted in its entirety and replaced with “Intentionally Omitted” and all references in the Indenture to such sections shall also be deleted in their entirety:

• Sections 4.4 (Payment of Taxes and Other Claims),

• Section 4.5 (Additional Guarantees),

• Section 4.6 (SEC Reports),

• Section 4.7 (Compliance Certificate),

• Section 4.8 (Change of Control),

• Section 4.9 (Limitation on Incurrence of Indebtedness),

• Section 4.10 (Limitation on Restricted Payments),

• Section 4.11 (Limitation on Liens),

• Section 4.12 (Limitation on Transactions with Affiliates),

• Section 4.13 (Limitation on Asset Sales),

• Section 4.14 (Limitation on Dividend and Other Restrictions Affecting Restricted Subsidiaries),

• Section 4.15 (Limitation on Sale and Leaseback Transactions),

• Section 4.17 (Conduct of Business),

• Section 4.18 (Maintenance of Properties; Insurance; Compliance with Law),

• Section 4.19 (Covenant Suspension),

• Subsections (d)(1) and (d)(2) of Section 5.1 (Merger, Consolidation and Sale of Assets),

• Subsections (iii), (iv), (v), (vi) and (ix) of Section 6.1 (Events of Default), and

• Section 10.7 (Execution of Supplemental Indenture for Future Guarantors).

          3. Amendment of Section 6.1(vii). Section 6.1(vii) of the Indenture is hereby deleted in its entirety and replaced with the following:

     (vii) a court having jurisdiction in the premises enters (x) a decree or order for relief in respect of Issuer or Parent in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or (y) a decree or order adjudging Issuer or Parent a bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of Issuer or Parent under any applicable federal or state law, or

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appointing a custodian, receiver, liquidator, assignee, trustee, sequestrator or other similar official of Issuer or Parent or of any substantial part of its property, or ordering the winding up or liquidation of its affairs, and the continuance of any such decree or order for relief or any such other decree or order unstayed and in effect for a period 60 consecutive days;

          4. Amendment of Section 6.1(viii). Section 6.1(viii) of the Indenture is hereby deleted in its entirety and replaced with the following:

     (viii) Terra Capital or Parent:

     (A) commences a voluntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or any other case or proceeding to be adjudicated a bankrupt or insolvent; or

     (B) consents to the entry of a decree or order for relief in respect of Issuer or Parent in an involuntary case or proceeding under any applicable federal or state bankruptcy, insolvency, reorganization or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against Issuer or Parent; or

     (C) files a petition or answer or consent seeking reorganization or relief under any applicable federal or state law; or

     (D) consents to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of Issuer or Parent or of any substantial part of its property; or

     (E) makes an assignment for the benefit of creditors; or

     (F) admits in writing its inability to pay its debts generally as they become due; or

     (G) takes corporate action in furtherance of any such action; or

          5. Amendment of Section 6.2. Section 6.2 of the Indenture is hereby deleted in its entirety and replaced with the following:

     SECTION 6.2. Acceleration. If an Event of Default occurs and is continuing (other than an Event of Default described in clause (vii) or (viii) of Section 6.1 with respect to Terra Capital, Issuer or Parent), the Trustee or the Holders of at least 25% in principal amount of the outstanding Notes may declare the principal of and accrued but unpaid interest on all the Notes to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default described in clause (vii) or (viii) of Section 6.1 occurs with respect to Issuer or Parent, the principal of and interest on all the Notes will ipso facto become and be immediately due and payable without any declaration or other act on the part of the Trustee or any Holders of the Notes. The Holders of a majority in aggregate principal amount of the outstanding Notes by notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto.

          6. Deletion of Certain Definitions. All definitions set forth in Section 1.1 of the Indenture that relate to defined terms used solely in sections deleted by this Third Supplemental Indenture are hereby deleted in their entirety.

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          7. Amendment of the Notes. Any corresponding provisions reflected in the Notes shall also be deemed amended in conformity herewith.

          8. Effectiveness of Amendments. This Third Supplemental Indenture shall be effective upon execution hereof by the Company, the Parent, the Guarantors and the Trustee; provided, however, that the amendments to the Indenture set forth in Sections 2 through 7 of this Third Supplemental Indenture shall not become operative until the Acceptance Date (as defined in the Offer to Purchase). If the Tender Offer is terminated, withdrawn or otherwise not consummated prior to acceptance of the Notes, this Third Supplemental Indenture shall automatically become null and void ab initio.

          9. Interpretation; Severability. After such time as the amendments set forth in this Third Supplemental Indenture have become operative pursuant to Section 8 hereto, the Indenture shall be modified and amended in accordance with this Third Supplemental Indenture, and all the terms and conditions of both shall be read together as though they constitute one instrument, except that, in case of conflict, the provisions of this Third Supplemental Indenture will control. The Indenture, as modified and amended by this Third Supplemental Indenture, is hereby ratified and confirmed in all respects and shall bind every holder of Notes. In case of conflict between the terms and conditions contained in the Notes and those contained in the Indenture, as modified and amended by this Third Supplemental Indenture, the provisions of the Indenture, as modified by this Third Supplemental Indenture, shall control. In case any provision in this Third Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

          10. Conflicts with Trust Indenture Act. If any provision of this Third Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern any provision of this Third Supplemental Indenture or the Indenture, the provision of the Trust Indenture Act shall control. If any provision of this Third Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act shall be deemed to apply to the Indenture as so modified or to be excluded by this Third Supplemental Indenture, as the case may be.

          11. GOVERNING LAW. THE THIRD SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PRINCIPLES THEREOF.

          12. Counterparts. The Third Supplemental Indenture may be executed in any number of counterparts, each of which shall be deemed an original; but all such counterparts shall together constitute but one and the same instrument.

          13. Effect of Headings. The Section headings herein are for convenience only and shall not affect the construction hereof.

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          14. Trustee. The recitals contained herein shall be taken as the statements of the Company, the Parent and the Guarantors, and the Trustee assumes no responsibility for their correctness.

* * * * *

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     IN WITNESS WHEREOF, the parties hereto have caused this Third Supplemental Indenture to be duly executed, all as of the day and year first above written.

TERRA CAPITAL, INC.
By:	/s/ John W. Huey
	Name:	John W. Huey
	Title:	Vice President, General Counsel and Corporate Secretary
TERRA INDUSTRIES INC.
By:	/s/ John W. Huey
	Name:	John W. Huey
	Title:	Vice President, General Counsel and Corporate Secretary
BEAUMONT AMMONIA INC. BEAUMONT HOLDINGS CORPORATION BMC HOLDINGS INC. PORT NEAL CORPORATION TERRA CAPITAL HOLDINGS, INC. TERRA ENVIRONMENTAL TECHNOLOGIES INC. TERRA GLOBAL HOLDING COMPANY INC. TERRA INTERNATIONAL, INC. TERRA INTERNATIONAL (OKLAHOMA) INC. TERRA INVESTMENT FUND LLC TERRA INVESTMENT FUND II LLC TERRA METHANOL CORPORATION TERRA NITROGEN CORPORATION TERRA REAL ESTATE CORP. TERRA (U.K.) HOLDINGS INC. TERRA MISSISSIPPI HOLDINGS CORP. TERRA MISSISSIPPI NITROGEN, INC. TERRA HOUSTON AMMONIA, INC. TERRA NITROGEN GP HOLDINGS, INC.
By:	/s/ John W. Huey
	Name:	John W. Huey
	Title:	Acting in the capacities identified on Appendix I hereto with respect to each of the Guarantors

U.S. BANK NATIONAL ASSOCIATION, as Trustee
By:	/s/ Richard Prokosch
	Name:	Richard Prokosch
	Title:	Vice President

APPENDIX I

Subsidiaries of the Company	Position of John W. Huey
Beaumont Ammonia Inc.	Vice President and Corporate Secretary
Beaumont Holdings Corporation	Vice President and Corporate Secretary
BMC Holdings Inc.	Vice President and Corporate Secretary
Port Neal Corporation	Vice President and Corporate Secretary
Terra Capital Holdings, Inc.	Vice President and Corporate Secretary
Terra Environmental Technologies Inc.	Vice President and Corporate Secretary
Terra Global Holding Company Inc.	Vice President and Corporate Secretary
Terra International, Inc.	Vice President and Corporate Secretary
Terra International (Oklahoma) Inc.	Vice President, General Counsel and Corporate Secretary
Terra Investment Fund LLC	Vice President, General Counsel and Corporate Secretary of Terra International, Inc.
Terra Investment Fund II LLC	Vice President, General Counsel and Corporate Secretary of Terra International, Inc.
Terra Methanol Corporation	Vice President and Corporate Secretary
Terra Nitrogen Corporation	Vice President and Corporate Secretary
Terra Real Estate Corp.	Vice President and Corporate Secretary
Terra (U.K.) Holdings Inc.	Vice President, General Counsel and Corporate Secretary
Terra Mississippi Holdings Corp.	Vice President
Terra Mississippi Nitrogen, Inc.	Vice President and Corporate Secretary
Terra Houston Ammonia, Inc.	Vice President, General Counsel and Corporate Secretary
Terra Nitrogen GP Holdings, Inc.	Vice President and Corporate Secretary

EX-99.1

Exhibit 99.1

For more information, contact:
Joe A. Ewing,
Vice President, Investor Relations
712/277-7305
jewing@terraindustries.com

Terra Capital, Inc. Receives Requisite Consents for Consent Solicitation
for Any and All of its 7.00% Senior Notes Due 2017

SIOUX CITY, IOWA (October 16, 2009)—Terra Capital, Inc. (“Terra Capital”), a wholly-owned subsidiary of Terra Industries Inc. (“Terra”) (NYSE: TRA), today announced that, as of 1:30 p.m., New York City time, on October 16, 2009, pursuant to its previously announced cash tender offer and consent solicitation (the “Tender Offer”) for any and all of its outstanding $330,000,000 7.00% Senior Notes due 2017 (CUSIP No. 88089PAF0) (the “2017 Notes”), it had received tenders and consents in respect of $166,220,000 aggregate principal amount of the 2017 Notes, representing approximately 50.37% of the outstanding 2017 Notes. Tendered 2017 Notes may no longer be withdrawn, and the related consents may not be revoked.

Holders who have not yet tendered their 2017 Notes may tender until 12:00 midnight, New York City time, on Monday, October 26, 2009, unless the Tender Offer is extended or terminated earlier by Terra Capital.

Any 2017 Notes not tendered and purchased pursuant to the Tender Offer will remain outstanding and the holders thereof will be bound by the amendments contained in the supplemental indenture eliminating substantially all of the restrictive covenants in the indenture governing the 2017 Notes even though they have not consented to the amendments.

The Tender Offer is made upon the terms and conditions set forth in the Offer to Purchase and Consent Solicitation Statement dated September 24, 2009, as amended (the “Offer to Purchase”) and the related Letter of Transmittal (the “Letter of Transmittal”).

Terra Capital has retained Credit Suisse Securities (USA) LLC to serve as dealer manager for the Tender Offer. U.S. Bank National Association will serve as the depositary and MacKenzie Partners, Inc. will serve as the information agent for the Tender Offer. None of Terra Capital, Terra, their respective board of directors, the dealer manager or the information agent is making any recommendation to holders as to whether to tender or refrain from tendering the 2017 Notes.

Requests for the Offer to Purchase and the Letter of Transmittal may be directed to MacKenzie Partners, Inc. by telephone at (212) 929-5500 (collect) or (800) 322-2885 (toll free). Questions regarding the Tender Offer may be directed to Credit Suisse Securities (USA) LLC at (212) 538-1862 (collect) or (800) 820-1653 (toll free).

     This press release does not constitute an offer to purchase, a solicitation of an offer to purchase, or a solicitation of consents with respect to the 2017 Notes nor is this announcement an offer or solicitation of an offer to sell new securities. The Tender Offer is made solely by

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Terra Industries Inc. • 600 Fourth Street • P.O. Box 6000 • Sioux City, Iowa 51102-6000
www.terraindustries.com • 712/277-1340 • NYSE Ticker: TRA

NEWS from Terra Industries Inc. October 16, 2009

means of the Offer to Purchase and the related Letter of Transmittal. These materials contain important information that should be read carefully before any decision is made with respect to the Tender Offer.

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,”

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Terra Industries Inc. • 600 Fourth Street • P.O. Box 6000 • Sioux City, Iowa 51102-6000
www.terraindustries.com • 712/277-1340 • NYSE Ticker: TRA

NEWS from Terra Industries Inc. October 16, 2009

“estimates,” and similar expressions are used to identify these forward-looking statements. In particular, statements about our plans or intentions regarding the completion of the tender offer and consent solicitation for the 2017 Notes 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:

• 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, 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.

Additional Contacts:
Matthew Sherman/Jamie Moser
Joele Frank, Wilkinson Brimmer Katcher
(212) 355-4449

msherman@joelefrank.com/jmoser@joelefrank.com

Larry Dennedy/Laurie Connell
MacKenzie Partners, Inc.
(800) 322-2885
terraproxy@mackenziepartners.com

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Terra Industries Inc. • 600 Fourth Street • P.O. Box 6000 • Sioux City, Iowa 51102-6000
www.terraindustries.com • 712/277-1340 • NYSE Ticker: TRA