Fitch keeps Terra on watch

Fitch Ratings said the ratings of Terra Industries, Inc. and its subsidiaries remain on Rating Watch evolving, including Terra's BB issuer default rating and BB- convertible preferred shares.

Terra announced its intent to declare a special dividend of $750 million to common shareholders expected to be paid in the fourth quarter. The dividend is subject to a tender of at least 51% of Terra's outstanding 7% senior notes due 2017 at a price of 104.5% of par. Terra intends to fund the offer through a $600 million issue of debt securities.

The agency said the Rating Watch evolving reflects a fluid situation, the resolution of which could have positive, negative or no impact on the risks to Terra's creditors. CF Industries Holdings, Inc. let its extended stock-for-stock offer for Terra expire at the end of August but has nominated slate of directors for election to Terra's Board at the latter's annual meeting on Nov. 20.

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