Fitch affirms Terra Industries

Fitch Ratings said it has affirmed Terra Industries' ratings at B+ for the senior secured credit facility and 12.875% senior secured notes and B- for the 11.5% senior secured second priority notes.

The ratings have been removed from Rating Watch negative status. A stable outlook has been assigned.

Fitch said Terra's ratings were placed on Rating Watch negative on Aug. 22, 2003 to capture the uncertainty in near-term future performance, the potential for covenant violations and the possibility of further liquidity deterioration at that time.

Poor volumes sold and the spike in natural gas cost in the spring of 2003 weakened Terra's financial position and the company had to draw on its credit facility during the second and third quarter of 2003 to meet cash needs. Revolver availability fell below $60 million subsequent to the end of the second quarter of 2003.

Since then, Terra's liquidity position and financial performance have improved. At March 31, 2004 Terra's credit facility was undrawn and the availability after accounting for the minimum availability covenant was $114 million. Terra also had a cash balance of $160 million at the end of the first quarter.

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