Moody's puts Terra under review

Moody's Investors Service said it placed Terra Industries Inc.'s ratings under review with direction uncertain, including its Ba3 corporate family and probability-of-default ratings and Terra Capital, Inc.'s B1 (LGD4, 65%) senior unsecured bonds.

The review follows the recent announcement of a proposed tender offer for Terra's $330 million of guaranteed senior unsecured notes due 2017 and the corresponding conditional special dividend and potential new notes issuance.

The agency said that while Terra's robust performance is in line with its positive view on the fertilizer markets, the review will focus understanding management's long-term financial philosophy. The company does not have a history of special dividends, Moody's said, and it remains to be seen whether this action is a one-time event or a change in management's overall financial strategy.

The review will also focus on the ultimate resolution of CF Industries Holdings, Inc.'s attempts to acquire Terra, Moody's added.

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