Not for distribution into the United States
Oslo (2010-02-17): Reference is made to the stock exchange notice by Yara
International ASA ("Yara") on 15 February 2010 regarding the signing of a cash
merger agreement with Terra Industries Inc. ("Terra"). In accordance with Oslo
Børs Continuing Obligations Article 3.4, certain additional information
regarding the contemplated transaction is set out below.
The Transaction and its Rationale
As set out in the stock exchange notice of 15 February 2010 Yara has signed a
cash merger agreement with Terra pursuant to which Yara will acquire all of the
outstanding shares of Terra common stock for USD 41.10 per share in cash. The
contemplated transaction has a total equity value of approximately USD 4.1
billion. Yara intends to fund a portion of the transaction through the planned
USD 2.0‐2.5 billion rights issue. Yara has not yet committed to any project
specific debt financing. The rights issue, which is supported by an equity
bridge and which is fully underwritten, excluding the Norwegian State's share,
will secure a strong position for further funding. Additionally, Yara has
undrawn committed loan agreements of USD 1.5 billion in place and expects a cash
receipt of approximately USD 620 million from the sale of Fosfertil shares in
the second quarter of 2010.
Yara is committed to the US market, and this transaction presents an attractive
opportunity for both companies to strengthen their positions in the US. Yara and
Terra are a perfect fit, and the combination will elevate Yara to a truly global
leader in the industry. Both companies are strong in ammonia and nitrates, and
have complementary geographical footprints. Terra's ammonia and upgraded
fertilizer distribution systems in the US will be combined with Yara's global
sourcing and optimization capabilities as the world's largest producer and
trader of fertilizer and ammonia.
The merger agreement is signed on the basis of Yara's proven M&A value creating
track record, a positive fertilizer market outlook and the improved competitive
edge of US nitrogen producers. The structural changes over the last years in the
global and U.S. gas market with ample LNG and shale gas have strongly improved
the cost position of U.S. producers. North American producers are in addition
benefiting from logistical advantages as the US will continue to need large
imports of nitrogen, and the high construction costs for new plants now favors
existing production capacity.
Yara has identified yearly cost synergies with pre-tax effects of USD 60 million
to be harvested within a year after closing. In addition, Yara is targeting soft
synergies of the same magnitude, including improved utilization and optimization
of logistical systems.
Neither Yara nor Terra have entered into, or expects to enter into, any
agreements in connection with the merger for the benefit of its senior employees
or members of the board of directors.
Terra Industries Inc.
Terra is a leading international producer of nitrogen products for agricultural,
industrial and environmental markets. Terra owns and operates six North American
nitrogen products manufacturing facilities and owns a 50% interest in joint
ventures in the United Kingdom and The Republic of Trinidad and Tobago. Terra
headquarters is in Sioux City, Iowa. Terra provides products that are essential
to meeting the needs of a growing global population. Terra's nitrogen product
line includes ammonia, urea ammonium nitrate solutions (UAN), ammonium nitrate
(AN) and urea. With the capacity to produce approximately 6.5 million tons of
product at its North American facilities annually, Terra is an imporant
contributor to the markets it serves. Terra employs approximately 938 people and
is listed on the New York Stock Exchange with ticker symbol TRA.
The Board of Directors of Terra consists of: Henry Slack (Chairman of the
Board), Michael Bennett, David Fisher, Martha Hesse, Dod Fraser, Peter Janson,
James Kroner, Dennis McGlone, John Lilly, David Wilson and Irving Yoskowitz.
The senior management of Terra consists of: Michael Bennett (President, Chief
Executive Officer and Director), Daniel Greenwell (Chief Financial Officer,
Senior Vice President), Douglas Stone (Senior Vice President, Sales and
Marketing), Joseph Giesler (Senior Vice President, Commercial Operations), John
Huey (Vice President, General Counsel, Corporate Secretary), Edward Dillon (Vice
President, Controller) Joe Ewing (Vice President,Investor Relations and Human
Resources), Richard Sanders (Vice President, Manufacturing), Geoffrey Obeney
(Vice President, Information Technology) and Earl Smith (Vice President,
Business Development).
Below is a summary of key figures from the profit and loss account and balance
sheet of Terra:
Income Statement
-------------------------------------------------------
In USDmm 2006 2007 2008 9M08 9M09 LTM
--------------------------------------------------------------------------------
Product Revenues 1,816 2,336 2,880 2,198 1,216 1,898
Other Income 4 7 11 10 4 5
-------------------------------------------------------
Total Revenue 1,820 2,343 2,891 2,208 1,220 1,904
Cost of Sales (1,701) (1,815) (2,028) (1,532) (921) (1,417)
SG&A (68) (92) (71) (58) (50) (62)
Other Operating
Expenses((1)) - - - - (14) (14)
Equity in Earnings of
North American
Unconsolidated
Affiliates((2)) 17 16 56 46 11 21
-------------------------------------------------------
Income from Operations 67 452 849 663 246 432
Interest Income 6 17 23 19 4 8
Interest Expense (48) (29) (27) (21) (20) (27)
Loss on Early
Retirement of Debt - (39) - - - -
-------------------------------------------------------
Income before Income 26 401 845 662 229 412
Taxes, Non-Controlling
Interest
and Equity Earnings of
GrowHow UK
Income Tax Provision (10) (127) (240) (230) (56) (66)
Non-Controlling
Interest (11) (50) (68) (52) (20) (36)
Equity Earnings of
Unconsolidated
Affiliates((2)) -
GrowHow UK - (3) 96 89 2 9
-------------------------------------------------------
Net Income Attributable
to Terra Industries -
Continuing 5 221 633 469 156 320
Income/(Loss) from
Discontinued Operations
- Net of Tax((3)) (1) (19) 8 8 1 1
-------------------------------------------------------
Net Income Attributable
to Terra Industries 4 202 641 476 156 321
Source: Company filings
(1) Other operating expenses of $14.3 million represents costs associated with
the unsolicited exchange offer by CF
(2) Investments accounted for on the equity method of accounting consist of:
(i) 50% ownership interest in Point Lisas Nitrogen Limited (PLNL), (ii) 50%
interest in an ammonia storage joint
venture located in Houston, Texas and (iii) 50% interest in a joint venture in
Oklahoma CO2, located in Verdigris, Oklahoma
(3) On December 31, 2008, Terra sold its Beaumont, Texas assets, including the
methanol and ammonia production facilities, to Eastman Chemical Company
(Eastman)
Balance Sheet
--------------------------------
In USDmm 2006 2007 2008 3Q08 3Q09
--------------------------------------------------------------------------------
Cash & Cash Equivalents 179 698 967 681 1,001
Accounts Receivables 199 171 130 236 104
Inventories 211 129 197 176 111
Other Current Assets 32 29 98 194 69
Current Assets of Discontinued Operations - 2 - 46 -
--------------------------------
Total Current Assets 621 1,030 1,392 1,332 1,285
Property, Plant & Equipment (Net) 721 390 403 407 435
Equity Method Investments 164 352 271 383 253
Other Non Current Assets 67 74 46 61 58
Non Current Assets of Discontinued Operations - 43 - - -
--------------------------------
Total Non-Current Assets 952 858 721 851 747
--------------------------------
Total Assets 1,573 1,888 2,113 2,183 2,031
Accounts Payable 156 111 100 124 71
Customer Prepayments 77 299 112 195 41
Other Current Liabilities 76 103 254 332 65
Current Liabilities of Discontinued Operations - 5 - 3 -
--------------------------------
Total Current Liabilities 309 518 465 654 176
Long Term Debt 331 330 330 330 330
Other Non-Current Liabilities 238 194 149 63 172
Non-Current Liabilities of Discontinued
Operations - 1 - 79
--------------------------------
Total Non-Current Liabilities 570 525 479 472 502
--------------------------------
Total Liabilities 879 1,042 944 1,126 679
Preferred Shares 116 116 2 2 0
Total Stockholder's Equity 483 620 1,059 959 1,257
Non Controlling Interest 95 110 108 96 96
--------------------------------
Total Equity 578 730 1,167 1,055 1,352
--------------------------------
Total Liabilities and Stockholder's Equity 1,573 1,888 2,113 2,183 2,031
Source: Company filings. 2006 Figures not
restated - - - - -
Additional financial information
Significant subsequent events of Terra to the key figures above include:
* 29 October 2009: Terra announced that its Board of Directors had declared
the previously announced special cash dividend of USD 7.50 per share
(payment date: 11 December 2009). Through the special cash dividend, Terra
returned an aggregate of approximately USD 750 million to shareholders
* 27 October 2009: Terra Capital, a wholly-owned subsidiary of Terra,
announced the completion of its cash tender offer for its outstanding USD
330 million 7.00% Senior Notes due 2017. As of the expiration date, Terra
Capital had received tenders from holders of approximately USD 317.5 million
aggregate principal amount. Terra Capital funded the purchase of these notes
with the proceeds of its completed sale of 7.75% Senior Notes due 2019
* 26 October 2009: Terra Capital, a wholly-owned subsidiary of Terra,
announced the closing of its private offering of USD 600 million aggregate
principal amount of Senior Notes due 2019. The notes bear an interest rate
of 7.75% per annun and were issued at a price equal to 98.298% of their face
value.
Advisors
Citigroup is serving as Yara's financial advisor, and Latham & Watkins LLP and
Wikborg, Rein & Co are serving as legal advisors to Yara in connection with the
Merger.
Citigroup, Deutsche Bank AG and Nordea Bank Norge ASA will act as lead managers
and joint bookrunners to Yara in connection with the rights issue, while Latham
& Watkins LLP and Wikborg Rein & Co will serve as legal advisors to Yara in
connection with the rights issue..
Contact
Torgeir Kvidal, Investor Relations
Telephone (+47) 24 15 72 95
Cellular (+47) 91 33 98 32
E-mail torgeir.kvidal@yara.com <mailto:torgeir.kvidal@yara.com>
Asle Skredderberget, Media Relations
Cellular (+47) 41 44 36 10
E-mail asle.skredderberget@yara.com <mailto:asle.skredderberget@yara.com>
Yara International ASA is the world's leading chemical company that converts
energy, natural minerals and nitrogen from the air into essential products for
farmers and industrial customers. As the number one global supplier of mineral
fertilizers, we help provide food for a growing world population. Our industrial
product portfolio includes environmental protection agents that prevent air
pollution. Yara's global workforce of 8000 employees represents the great
diversity and knowledge that enables Yara to remain a leading performer in the
industry.
www.yara.com <
http://www.yara.com/>
This announcement is not an offer of securities for sale in the United States.
Securities offered pursuant to the transaction referred to in the announcement
may not be offered in the United States absent registration or an exemption from
such registration. Any offering of securities for sale in the United States
will be made only by means of an offering circular that will contain detailed
information regarding Yara and such securities as well as the financial
statements of Yara. Such offering circular will be provided only to
shareholders and others in compliance with the relevant exemptions from
registration.
This information is subject of the disclosure requirements acc. to §5-12 vphl
(Norwegian Securities Trading Act)
[HUG#1385179]