13:30 | 14.10.2009
CF Industries Files Definitive Proxy Materials to Elect Three Nominees to Terra Industries Board of Directors and Sends Open Letter to Terra Stockholders
CF Industries Holdings, Inc. (NYSE: CF) today mailed the following
letter to the stockholders of Terra Industries Inc. (NYSE: TRA) along
with its definitive proxy materials in connection with Terra’s 2009
annual meeting. CF Industries is soliciting votes to elect CF
Industries’ slate of three highly qualified, independent nominees to
Terra’s board of directors. CF Industries’ director nominees are John N.
Lilly, David A. Wilson, and Irving B. Yoskowitz.
“We are looking forward to Terra’s annual meeting on November 20 when
Terra stockholders will have the opportunity to show support for CF
Industries’ proposal for a business combination with Terra,” said
Stephen R. Wilson, chairman, president and chief executive officer of CF
Industries. “We have made a compelling proposal to Terra for an
all-stock transaction at a significant premium. Since Terra first
proposed a business combination with us in 2004, CF Industries and Terra
have had many discussions regarding combining our two companies,
including in 2007, when Terra reaffirmed the strategic merits of a
combination. Now is the time to advance this compelling business
combination by electing our director nominees at Terra’s annual meeting.”
The following letter has been sent to Terra stockholders with CF
Industries’ definitive proxy statement:
Dear Terra Industries Stockholder:
At Terra’s upcoming annual meeting scheduled for November 20, 2009, we
are seeking your support to elect three highly qualified, independent
nominees to Terra’s board. By voting for our independent nominees, you
will show your support for our proposed business combination with Terra,
a transaction that offers Terra stockholders a substantial premium and
the opportunity to participate in a compelling combination.
We urge you to vote FOR our
three independent nominees on the BLUE
proxy card TODAY.CF INDUSTRIES IS OFFERING A SUBSTANTIAL PREMIUM FOR YOUR SHARES
Our proposal provides Terra stockholders a very substantial premium. The
proposed exchange ratio of 0.465 of a CF Industries share for each
outstanding Terra share represents a premium of over 35% to the 0.3449
unaffected exchange ratio based on the closing share prices of CF
Industries and Terra on January 15, 2009, when we announced our initial
proposal. This premium is well above the average historical premium for
all-stock transactions.
In addition, based on our financial performance during 2009, we believe
the effective premium we are offering is well above 35%. Since we made
our initial proposal in January, our financial performance has exceeded
that of Terra significantly. For example, during the first half of 2009,
CF Industries generated EBITDA (earnings from continuing operations
after non-controlling interest before interest, taxes, depreciation and
amortization) of approximately $508 million compared to EBITDA generated
by Terra of approximately $218 million. Also during this same period, CF
Industries’ financial results have exceeded consensus sell-side
analysts’ profit expectations by a substantial amount. Based on this
superior financial performance, we believe that CF Industries’ shares
would have increased more than Terra’s shares during 2009 absent any
takeover proposals, and that the premium we are offering is effectively
well above 35%.
We believe that Terra’s stock price would be significantly lower absent
our proposal.
THE TERRA-CF INDUSTRIES COMBINATION ALLOWS YOU TO PARTICIPATE IN THE
UPSIDE AND GROWTH OF THE COMBINED COMPANY, INCLUDING UP TO $135 MILLION
IN SYNERGIES
We have identified annual cost synergies of up to $135 million expected
from elimination of overlapping corporate functions, optimization of
transportation and distribution systems, and through greater economies
of scale in procurement and purchasing, among other areas. Given the
all-stock nature of the transaction, you will be able to participate
fully in the stockholder value created from the realization of these
synergies. After the combination, we believe the management teams of CF
Industries and Terra will identify even more value from operating
synergies.
COMPELLING STRATEGIC RATIONALE FOR COMBINING TERRA AND CF INDUSTRIES
The combined company will be a stronger, more competitive player in the
global nitrogen fertilizer industry, becoming the global #2 public
company. We believe that the two companies are highly complementary and
the strategic rationale of this combination is extremely compelling. The
strategic merits of the combination are also well understood by Terra,
who first proposed a business combination with CF Industries in 2004.
CF Industries and Terra Industries have complementary strengths in
nitrogen, providing breadth and flexibility in nitrogen product
offerings. In addition, the locations of CF Industries’ and Terra’s
facilities together increase their domestic geographic reach. The two
companies’ distribution and manufacturing assets combined would enhance
service to customers in the agriculturally important central U.S.
region, improving the availability, accessibility and timeliness of
products to customers. The combined company would also benefit from CF
Industries’ strong world-scale position in phosphate.
Furthermore, the combination of Terra and CF Industries will create a
larger, more stable company that will be better positioned to pursue
growth initiatives with less risk than either company could pursue alone.
Finally, the all-stock nature of the combination will allow Terra
stockholders to participate fully in the growth and upside potential of
the combined company. You will maintain your exposure to the global
fertilizer industry and be invested in a financially stronger, more
competitive player.
ELECT OUR NOMINEES TO SHOW YOUR SUPPORT FOR THE BUSINESS COMBINATION
Our director nominees are highly qualified and bring with them their
diverse experiences.
John N. Lilly, president of John Lilly Strategic Insights, LLC
and former chief executive officer of The Pillsbury Company.
David A. Wilson, president and chief executive officer of the
Graduate Management Admission Council and former managing partner at
Ernst & Young LLP.
Irving B. Yoskowitz, senior counsel at Dickstein Shapiro LLP
and former executive vice president and general counsel of
Constellation Energy Group, Inc., the parent company of Baltimore Gas
& Electric Company.
None of these nominees is affiliated with CF Industries or has any
relationship with CF Industries (except for his agreement to serve as a
nominee for Terra’s board). The nominees are independent within the
meaning of the listing standards of the New York Stock Exchange as well
as the Corporate Governance Guidelines of Terra Industries.
Our proposed business combination with Terra may only proceed with the
approval of Terra’s board of directors, and the election of our nominees
is an important step towards this transaction.
VOTE FOR OUR HIGHLY QUALIFIED
AND INDEPENDENT NOMINEES ON THE BLUE
PROXY CARD TODAY
We are excited about our proposed business combination with Terra
Industries and look forward to your support for our nominees and this
important transaction.
We urge you to sign, date and return the enclosed BLUE proxy card
if you hold your shares in your own name or to follow the instructions
provided by your broker if you hold your shares in “street name” TODAY
with a vote FOR our nominees. If you have any questions or need
assistance in voting your shares, please call our proxy solicitor,
Innisfree M&A Incorporated, toll free at (877) 456-3507.
Sincerely,
CF Industries
Morgan Stanley and Rothschild are acting as financial advisors and
Skadden, Arps, Slate, Meagher & Flom LLP is acting as legal counsel to
CF Industries.
Additional information for Investors, Employees, Customers and the
Agribusiness Community is available at www.transactioninfo.com/cfindustries
or www.cfindustries.com.About CF Industries
CF Industries Holdings, Inc., headquartered in Deerfield, Illinois, is
the holding company for the operations of CF Industries, Inc. CF
Industries, Inc. is a major producer and distributor of nitrogen and
phosphate fertilizer products. CF Industries operates world-scale
nitrogen fertilizer plants in Donaldsonville, Louisiana and Medicine
Hat, Alberta, Canada; conducts phosphate mining and manufacturing
operations in Central Florida; and distributes fertilizer products
through a system of terminals, warehouses, and associated transportation
equipment located primarily in the Midwestern United States. The company
also owns a 50 percent interest in KEYTRADE AG, a global fertilizer
trading organization headquartered near Zurich, Switzerland. Additional
information on CF Industries is found on the company’s website at www.cfindustries.com.
Additional Information
This communication is neither an offer to sell or the solicitation of an
offer to buy any securities, nor is it a substitute for the
prospectus/proxy statement CF Industries Holdings, Inc. (“CF Holdings”)
would file with the Securities and Exchange Commission (the “SEC”)
regarding the proposed transaction with Terra Industries Inc. (“Terra”)
if such a negotiated transaction is reached or for any other document
which CF Holdings may file with the SEC and send to CF Holdings or Terra
stockholders in connection with the proposed transaction. INVESTORS AND
SECURITY HOLDERS OF CF HOLDINGS AND TERRA ARE URGED TO READ ANY SUCH
DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY IF AND WHEN
THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION
ABOUT THE PROPOSED TRANSACTION.
Investors and security holders will be able to obtain free copies of any
documents filed by CF Holdings with the SEC through the web site
maintained by the SEC at www.sec.gov.
Free copies of any such documents can also be obtained by calling
Innisfree M&A Incorporated toll-free at (877) 456-3507.
CF Holdings and its directors and executive officers will be
participants in any solicitation of proxies from Terra stockholders or
CF Holdings stockholders in respect of the proposed transaction with
Terra. Information regarding CF Holdings’ directors and executive
officers is available in the supplement to its proxy statement for its
2009 annual meeting of stockholders, which was filed with the SEC on
April 7, 2009, and a description of their direct and indirect interests
in such solicitation, by security holdings or otherwise, will be
contained in the proxy statement/prospectus filed in connection with the
proposed transaction with Terra.
Safe Harbor Statement
Certain statements contained in this communication may constitute
“forward-looking statements.” All statements in this communication,
other than those relating to historical information or current
condition, are forward-looking statements. These forward-looking
statements are subject to a number of risks and uncertainties, many of
which are beyond our control, which could cause actual results to differ
materially from such statements. Risks and uncertainties relating to the
proposed transaction include: Terra’s failure to accept CF Holdings
proposal and enter into definitive agreements to effect the transaction;
our ability to obtain shareholder and other approvals on the proposed
terms and schedule; uncertainty of the expected financial performance of
CF Holdings following completion of the proposed transaction; CF
Holdings’ ability to achieve the cost-savings and synergies contemplated
by the proposed transaction within the expected time frame; CF Holdings’
ability to promptly and effectively integrate the businesses of Terra
and CF Holdings; and disruption from the proposed transaction making it
more difficult to maintain relationships with customers, employees or
suppliers. Additional risks and uncertainties include: the relatively
expensive and volatile cost of North American natural gas; the cyclical
nature of our business and the agricultural sector; changes in global
fertilizer supply and demand and its impact on the selling price of our
products; the nature of our products as global commodities; intense
global competition in the consolidating markets in which we operate;
conditions in the U.S. agricultural industry; weather conditions; our
inability to accurately predict seasonal demand for our products; the
concentration of our sales with certain large customers; the impact of
changing market conditions on our forward pricing program; the reliance
of our operations on a limited number of key facilities; the significant
risks and hazards against which we may not be fully insured; reliance on
third party transportation providers; unanticipated adverse consequences
related to the expansion of our business; our inability to expand our
business, including the significant resources that could be required;
potential liabilities and expenditures related to environmental and
health and safety laws and regulations; our inability to obtain or
maintain required permits and governmental approvals or to meet
financial assurance requirements; acts of terrorism; difficulties in
securing the supply and delivery of raw materials we use and increases
in their costs; losses on our investments in securities; loss of key
members of management and professional staff; recent global market and
economic conditions, including credit markets; and the other risks and
uncertainties included from time to time in our filings with the SEC.
Except as required by law, we undertake no obligation to update or
revise any forward-looking statements.
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