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 19, 2009

TERRA INDUSTRIES INC.

(Exact name of registrant as specified in its charter)

Maryland	1-8520	52-1145429
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer 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))

ITEM 7.01 REGULATION FD DISCLOSURE

     In the preliminary offering memorandum distributed to investors in connection with the private offering described under Item 8.01 of this Current Report on Form 8-K, Terra Industries Inc. (“Terra”) disclosed the following updated information:

Risk Factors

If the global economic downturn continues or worsens, our business could be adversely impacted.
In the latter part of 2008 and into 2009, the global economic downturn worsened and the nitrogen markets continued to weaken. We have experienced declining demand and falling prices for some of our products due to the general economic slowdown and our customers’ reluctance to replenish inventories. In particular, industrial demand for ammonia has remained relatively weak as the economy has struggled to recover. At the same time, the economic downturn has also reduced demand and pricing for natural gas, the primary raw material used in the production of nitrogen products, which has helped to reduce our production costs. In light of these varied and sometimes offsetting effects, the overall impact of the global economic downturn is difficult to predict and our business could be adversely impacted.

We are exposed to risks associated with our joint venture investments.
We participate in several joint ventures with third parties. Our joint venture partners may have shared or majority control over the operations of our joint ventures. As a result, our investments in joint ventures involve risks that are different from the risks involved in owning facilities and operations independently. These risks include the possibility that our joint ventures or our partners:

• have economic or business interests or goals that are or become inconsistent with our business interests or goals;

• are in a position to take action contrary to our instructions, requests, policies or objectives;

• subject the property to liabilities exceeding those contemplated;

• take actions that reduce our return on investment; or

• take actions that harm our reputation or restrict our ability to run our business.

In addition, we may become involved in disputes with our joint venture partners, which could lead to impasses or situations that could harm the joint venture, which could reduce our revenues, increase our costs and lower our profits.

Disruption in or increased costs of transportation services could have an adverse effect on our profitability.
We depend on rail, barge, truck and pipeline transportation services to deliver nitrogen products to our customers, and transportation costs are a significant component of the total cost of supplying nitrogen products. Disruptions of these transportation services could temporarily impair our ability to supply nitrogen products to our customers. In addition, increases in our transportation costs, or changes in such costs relative to transportation costs incurred by our competitors, could have an adverse effect on our revenues and costs of operations.

CF’s continued proposals for a business combination with us may be disruptive to our business and adversely affect our operations and results.
Since the beginning of 2009, CF Industries Holdings, Inc. (“CF”) has made five separate proposals for a business combination with us. Each proposal has been carefully considered by our board of directors and thoroughly reviewed by our financial and legal advisors. Our board of directors has unanimously determined that each of CF’s proposals runs counter to our strategic objectives, substantially undervalues Terra both absolutely and relative to CF and would deliver less value to our shareholders than would

owning Terra on a stand-alone basis. In an attempt to advance CF’s proposals for a business combination with Terra, CF has nominated and is soliciting proxies for an opposition slate of three nominees for election as directors at our 2009 annual meeting, scheduled for November 20, 2009, and has filed a definitive proxy statement with the SEC with respect to such solicitation. The uncertainty regarding the outcome of CF’s continued proposals may disrupt our business which could result in an adverse effect on our operating results.

Responding to the CF proposals has been, and may continue to be, a distraction for our management and employees and has required and may continue to require us to incur significant costs. Management and employee distraction related to the CF proposals also may adversely impact our ability to optimally conduct our business and pursue our strategic objectives.

Industry Overview

Outlook
As of July 2009, Fertecon Fertilizer Economic Market Analysis & Consultancy (“Fertecon”) forecasts that global nitrogen fertilizer demand is expected to rise by around 1.6% per year from 2009 to 2020, increasing by 22.6 million tons or close to 21% over the period. In North America, nitrogen fertilizer consumption is expected to increase in the period from 2009 to 2020 from 15 million tons to 16 million tons, a 6.5% increase. The continued growth in demand for nitrogen products has helped stabilize global ammonia capacity utilization rates, which averaged 82.5% between 2007 and 2008. According to Fertecon, global ammonia utilization rates are forecasted to remain in the high 70th percentile from 2009 through 2020. North American ammonia utilization rates are forecast to remain stable at approximately 85% from 2009 through 2020.

To help meet the growing global demand for fertilizers, especially in high growth areas like China and India, new ammonia capacity is expected to come on stream globally in the next six years. According to Fertecon, global ammonia capacity is forecast to increase by 18.7 million tons from 2009 to 2015, a total increase of 13%. This projected capacity increase excludes Chinese plants as any new volumes in China are not expected to reach global markets. There are a number of new capacity projects expected or underway in gas advantaged regions; however, increased construction costs and changes in market dynamics have delayed a number of such projects.

World trade in ammonia is expected to increase by 4.5 million tons or 23% in the period from 2009 to 2015, according to Fertecon, representing more modest growth than seen from 2000 to 2005. Fertecon projects that higher gas costs for Russian and Ukrainian exporters and the lower relative gas price outlook for the U.S. would appear to support continued operating rates at the remaining U.S. ammonia capacity, limiting the near-term growth in ammonia, urea and UAN imports.

Global grain inventories are currently at levels near the ten-year average, and corn prices, which have been volatile in recent months, stand at $3.47 per bushel as of October 9, 2009, versus $3.95 per bushel one year prior. Both of these factors influence the outlook for demand for our products.

The emergence of ethanol as an alternative energy source has the potential to drive incremental fertilizer demand. Corn, the primary feedstock for U.S. ethanol production, represents approximately 47% of fertilizer demand in North America. The amount of corn used in the U.S. for ethanol production has more than doubled in the last five years. During 2007 and 2008, approximately 3.0 billion bushels of corn were used for ethanol production.

According to the USDA, a 21% increase is forecast for the current 2008 to 2009 crop year, bringing the total bushels used for ethanol to 3.7 billion. This number is projected to rise to almost 4.2 billion bushels by the 2009 to 2010 crop year, equivalent to approximately 32% of the U.S. corn crop.

The 1990 Amendments to the Clean Air Act mandate increasingly strict emissions limits on companies that combust fossil fuels. Reduction of oxides of both nitrogen and sulfur are accomplished with Selective Catalytic Reduction and wet scrubbing technologies. Environmental control devices using ammonia or ammonia based compounds, across a broad range of applications from coal based generation to diesel engines, are very effective in meeting emissions targets. Further, Terra Environmental Technologies Inc. is establishing an infrastructure to serve the diesel engine transportation market. We believe these new and emerging markets may increase North American demand for ammonia by close to 1.0 million tons by 2015.

In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

ITEM 8.01 OTHER EVENTS

     On October 19, 2009, Terra Capital, Inc., a wholly-owned subsidiary of Terra, issued a press release announcing that it intends to offer, subject to market and other conditions, $600 million aggregate principal amount of Senior Notes due 2019 in a private offering that is exempt from the registration requirements of the Securities Act.

     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

99.1 Press release of Terra Industries Inc., issued October 19, 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 19, 2009

EXHIBIT INDEX

Exhibit
Number		Description
	99.1	Press release of Terra Industries Inc., issued October 19, 2009.

EX-99.1

Exhibit 99.1

Terra Capital, Inc. Announces $600 Million
Private Offering of Senior Notes

SIOUX CITY, IOWA (October 19, 2009)—Terra Capital, Inc. (“Terra Capital”), a wholly-owned subsidiary of Terra Industries Inc. (“Terra”) (NYSE: TRA), announced today that it intends to offer, subject to market and other conditions, $600 million aggregate principal amount of Senior Notes due 2019 (the “Notes”) in a private offering that is exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”). The Notes will be guaranteed on a senior unsecured basis by Terra and certain of its subsidiaries.

Terra Capital will use a portion of the net proceeds of the offering, together with available cash, to purchase its existing 7.00% Senior Notes due 2017 and to pay related premiums, fees and expenses, pursuant to a cash tender offer announced on September 24, 2009. Subject to certain conditions, Terra also intends to use a portion of the net proceeds of the offering, together with available cash, to pay a planned special cash dividend or consummate certain previously announced asset acquisitions. However, there can be no assurances that the offering of the Notes, the cash tender offer, the payment of the special cash dividend or any asset acquisitions will be completed as described herein or at all.

This news release does not constitute an offer to sell or the solicitation of an offer to buy any of the Notes or any other securities, nor will there be any sale of the Notes or any other securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The Notes will be issued in reliance on the exemption from the registration requirements provided by Rule 144A under the Securities Act and, outside of the United States, only to non-U.S. investors pursuant to Regulation S under the Securities Act. None of the Notes have been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Securities Act and applicable state securities laws.

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

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Terra Industries Inc. u 600 Fourth Street u P.O. Box 6000 u Sioux City, Iowa 51102-6000
WWW.TERRAINDUSTRIES.COM u 712/277-1340 u NYSE Ticker: TRA

NEWS from Terra Industries Inc. October 19, 2009

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 offering of the Notes, the completion of the cash tender offer, the declaration and payment of the special cash dividend and the consummation of any asset acquisitions 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 Terra Capital’s offering of the Notes will not be completed,

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Terra Industries Inc. u 600 Fourth Street u P.O. Box 6000 u Sioux City, Iowa 51102-6000
WWW.TERRAINDUSTRIES.COM u 712/277-1340 u NYSE Ticker: TRA

NEWS from Terra Industries Inc. October 19, 2009

• the risk that Terra Capital’s cash tender offer for the 7.00% Senior Notes due 2017 will not be completed,

• risks related to potential acquisition transactions, including that they may not be entered into or consummated,

• 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. u 600 Fourth Street u P.O. Box 6000 u Sioux City, Iowa 51102-6000
WWW.TERRAINDUSTRIES.COM u 712/277-1340 u NYSE Ticker: TRA