Terra Files Definitive Proxy Materials and Mails Letter to Shareholders

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Urges Shareholders to Vote FOR Terra`s Nominees on WHITE Proxy Card Today
SIOUX CITY, Iowa--(Business Wire)--
Terra Industries Inc. (NYSE: TRA) ("Terra" or the "Company") today announced
that it filed with the Securities and Exchange Commission definitive proxy
materials in connection with the Company`s 2009 Annual Meeting of Shareholders,
which is scheduled for November 20, 2009. Shareholders of record as of October
9, 2009 will be entitled to vote at the meeting.

Terra`s Board of Directors unanimously recommends that shareholders re-elect
Terra`s three independent, highly-qualified and experienced directors - Martha
O. Hesse, Dennis McGlone, and Chairman, Henry R. Slack. Shareholders are
encouraged to vote today by telephone, Internet or by signing, dating and
returning the WHITE proxy card.

The Company today mailed the following letter to shareholders:

October 13, 2009

Dear Fellow Terra Shareholder:

At the upcoming Annual Meeting of Shareholders scheduled for November 20, 2009,
you will have the opportunity to re-elect three of Terra`s highly-qualified and
experienced independent directors - Martha O. Hesse, Dennis McGlone, and our
Chairman, Henry R. Slack.

As you know, CF Industries Holdings, Inc. ("CF") has nominated three candidates
for election to your Board in opposition to the Company`s nominees. CF has taken
this step in an attempt to advance its inadequate merger proposal. We believe
electing CF`s nominees would serve only the interests of CF and not the
interests of all Terra shareholders. Your Board and management team are
committed to enhancing shareholder value by continuing to execute our strategic
plan, which we believe will deliver significantly more value to shareholders
than CF`s proposal.

Your vote is extremely important. Your Board urges you to vote FOR your
Company`s nominees TODAY by telephone, Internet or by signing, dating and
returning the WHITE proxy card in the postage-paid envelope provided.

YOUR BOARD IS EXECUTING THE RIGHT STRATEGY TO
DELIVER LONG-TERM VALUE TO ALL TERRA SHAREHOLDERS

Terra`s strategy builds on our strengths as a "pure play" nitrogen company by
focusing on higher margin products, broad geographic diversification both for
natural gas supplies and manufacturing, and business diversification into
environmental services to expand our customer base outside of core agricultural
markets. We believe that Terra`s strategic plan, financial resources and market
conditions provide compelling opportunities for continued growth.

The successful execution of our strategy and prudent management of our financial
resources have allowed us to continue to deliver value and results to our
shareholders. Terra recently announced plans to return an aggregate of
approximately $750 million in cash to shareholders through a special cash
dividend of $7.50 per share. The special dividend is in addition to the 35% of
net income we have returned to shareholders over the past three years in the
form of share repurchases and dividends. We expect the special dividend, which
is conditioned on the successful completion of our bond tender offer and new
debt financing, as well as on the consent of our lenders, to be declared and
paid during the fourth quarter. Terra`s strong balance sheet enables us to
pursue opportunities to acquire assets that complement our business and fit our
strategic objectives and long-term industry trends.

CF`S UNSOLICITED NON-BINDING PROPOSAL IS NOT
IN THE BEST INTERESTS OF TERRA OR ITS SHAREHOLDERS

CF has made five separate proposals to the Terra Board over the last nine
months, none showing any material improvement over the initial unsolicited offer
that CF made on January 15, 2009. Terra's Board has been consistent in its
assessment of the proposals and the lack of strategic or financial merit in a
combination between Terra and CF. Among the many reasons why Terra continues to
reject CF`s proposals include:

* CF`s proposal is contrary to Terra`s strategy, which we believe will deliver
greater value for our shareholders than CF`s proposal, and with significantly
less risk. Terra`s interactions with CF over the years have allowed Terra`s
management to develop a solid understanding of CF, its business and management.
Terra believes that the industrial logic behind CF`s proposal is not compelling
and is inconsistent with Terra`s strategic plan.

A combination with CF would shift our focus back to lower margin agricultural
urea and ammonia, which represent 70% of CF`s nitrogen sales and only 16% of
Terra`s, while significantly reducing our geographic advantages. Terra currently
operates nine ammonia-based nitrogen chemical complexes on three continents,
while CF operates two nitrogen complexes and one phosphate facility, all in
North America. In addition, CF has 73% of its ammonia production on the U.S.
Gulf Coast where import competition is the most severe, whereas 65% of Terra`s
ammonia production already is located inland or in gas advantaged countries,
such as the Republic of Trinidad and Tobago, where Terra maintains a 50%
interest in a successful ammonia manufacturing facility.

Further, a combination with CF would jeopardize our business diversification
strategy, which has not been evident at CF. Terra, by contrast, has spent years
developing Terra Environmental Technologies, a leader in nitrogen oxide
abatement chemistry and the leading North American diesel exhaust fluid
producer. At the same time, it would undercut Terra`s strength as a "pure play"
nitrogen company by exposing Terra shareholders to risks associated with the
phosphate fertilizer market without compelling scale in that nutrient.

* CF`s proposal is opportunistic and does not fully reflect the underlying
fundamental value of Terra`s assets, operations and strategic plan, including
its strong market position, large cash position, and future growth prospects.
While Terra would contribute 59% of the nitrogen results of the combined entity
(based on full year 2008 results), CF`s proposed exchange ratio would give Terra
shareholders only 43.6% of the equity of the combined entity after giving effect
to CF`s adjustment for our proposed special dividend (based on CF`s stock price
at October 8, 2009). In addition, CF`s proposed "Contingent Future Shares", the
sole purpose of which is to claw back consideration from Terra shareholders,
could result in Terra shareholders receiving only 41.2% of the equity of the
combined company (post-dividend adjustment), which is lower than CF`s initial
offer nine months ago.1
* Agrium`s pending premium offer for CF creates significant uncertainty for
Terra shareholders. Terra`sBoard believes CF shareholders are unlikely to
approve a transaction with Terra if given the alternative of the Agrium bid.
Terra`s Board also believes that CF`s stock price has been inflated as a result
of Agrium`s pending premium offer for CF, meaning the actual value of CF`s offer
could be significantly lower than current trading prices would indicate.

CF IS NOMINATING DIRECTORS TO TERRA`S BOARD TO
ADVANCE A SELF-SERVING AGENDA

CF has nominated three directors for election to Terra`s Board to further its
attempt to acquire Terra in a transaction that your Board believes lacks
compelling industrial logic, runs counter to our strategic objectives and fails
to appropriately value Terra either on an absolute or relative basis. Yet CF
does not even have a binding offer on the table. CF terminated its exchange
offer for Terra on August 31, 2009, and its current merger proposal is
conditioned upon CF`s satisfactory due diligence investigation of Terra. CF thus
asks Terra shareholders to place CF nominees on the Terra Board while CF
investigates whether and on what terms it would like to acquire Terra.

CF has also announced that after it terminated its exchange offer for Terra, it
purchased approximately 7 percent of Terra`s outstanding shares in the market.
While we agree with CF that Terra shares are a compelling investment, we do not
believe that CF`s buying of votes can mask the flaws in its proposal.

PROTECT THE VALUE OF YOUR INVESTMENT
AND THE FUTURE OF YOUR COMPANY

Your Board remains focused on doing the right thing for our shareholders. Over
the last nine months, the Board has acted in your best interests, appropriately
and diligently reviewing all of CF`s inadequate proposals. At Terra`s Annual
Meeting, you will have an opportunity to express your views and determine the
future of your investment in the Company. We are confident that Terra has the
right Board, the right management team and the right plan in place to continue
delivering value to all Terra shareholders. Terra`s Board, which is composed
nearly entirely of independent directors, is focused on creating shareholder
value and not beholden to any particular agenda or constituency. Your Board
unanimously and strongly recommends that you reject CF`s three nominees.

Your vote is IMPORTANT no matter how many shares you own. Please vote TODAY by
telephone, Internet or by signing, dating and returning the enclosed WHITE proxy
card. A postage-paid envelope is provided for your convenience. We urge you to
discard any blue proxy card you may receive from CF.

In our interactions with you, our shareholders, you have been consistently and
strongly supportive of our rejections of CF`s proposals. We welcome and will
continue to solicit your opinions so we can continue to best represent your
interests and views.

If you have any questions concerning CF`s proposal or need additional copies of
Terra`s publicly-filed materials, please contact MacKenzie Partners, Inc. at
(800) 322-2885 (Toll-Free) or at (212) 929-5500 (Collect).

We appreciate your continued support.

Sincerely,

/s/ Michael L. Bennett /s/ Henry R. Slack
Michael L. Bennett Henry R. Slack
President and Chief Executive Officer Chairman of the Board

If you have any questions, require assistance with voting your WHITE proxy card,

or need additional copies of the proxy materials, please contact:

MacKenzie Partners, Inc.

105 Madison Avenue

New York, NY 10016

email: terraproxy@mackenziepartners.com

(212) 929-5500 (Call Collect)

Or

TOLL-FREE (800) 322-2885

About Terra

Terra Industries Inc., with 2008 revenues of $2.9 billion, is a leading North
American producer and marketer of nitrogen products.

Important Information and Where to Find It

On October 13, 2009, Terra filed with the Securities and Exchange Commission
(the "SEC") a definitive proxy statement in connection with its 2009 Annual
Meeting, and is mailing the definitive proxy statement to its shareholders.
Investors and security holders are urged to read the definitive proxy statement
relating to the 2009 Annual Meeting and any other relevant documents filed with
the SEC (when available), because they contain important information. Investors
and security holders may obtain a free copy of the definitive proxy statement
and other documents that Terra files with the SEC (when available) at the SEC`s
Web site at www.sec.gov and Terra`s Web site at www.terraindustries.com. In
addition, the definitive proxy statement and other documents filed by Terra with
the SEC (when available) may be obtained from Terra free of charge by directing
a request to Terra Industries Inc., Attn: Investor Relations, Terra Industries
Inc., 600 Fourth Street, P.O. Box 6000, Sioux City, IA 51102-6000.

Certain Information Concerning Participants

Terra, its directors, executive officers and certain employees specified in
Annex A to Terra`s definitive proxy statement for the 2009 Annual Meeting, which
was filed with the SEC on October 13, 2009, are participants in the solicitation
of Terra`s security holders in connection with its 2009 Annual Meeting. Security
holders may obtain information regarding the names, affiliations and interests
of such individuals in Terra`s Annual Report on Form 10-K for the year ended
December 31, 2008, which was filed with the SEC on February 27, 2009 and amended
on April 28, 2009, and its definitive proxy statement for the 2009 Annual
Meeting. To the extent holdings of Terra securities have changed since the
amounts printed in the definitive proxy statement for the 2009 Annual Meeting,
such changes have been or will be reflected on Statements of Change in Ownership
on Form 4 filed with the SEC. These documents (when available) may be obtained
free of charge from the SEC`s Web site at www.sec.gov and Terra`s Web site at
www.terraindustries.com.

Forward-Looking Statements

Certain statements in this communication may constitute "forward-looking"
statements within the meaning of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based upon assumptions as to future events
that may not prove to be accurate. Actual outcomes and results may differ
materially from what is expressed or forecasted in these forward-looking
statements. As a result, these statements speak only as of the date they were
made and Terra undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as otherwise required by law. Words such as
"expects," "intends," "plans," "projects," "believes," "estimates," and similar
expressions are used to identify these forward-looking statements. In
particular, statements about Terra`s plans or intentions regarding the
declaration and payment of the special cash dividend and Terra`s exploration of
potential acquisition transactions are forward-looking statements and may not
necessarily occur. Forward-looking statements are not guarantees of future
performance and involve risks, uncertainties and assumptions that are difficult
to predict. These risks, uncertainties and assumptions include, among others:

• the risk that Terra Capital, Inc.`s tender offer for the 7.00% Senior Notes
due 2017 of Terra will not be completed,

• the risk that Terra`s planned debt financing will not be consummated,

• the risk that the requisite consent of lenders under Terra Capital, Inc.`s
existing credit facility will not be obtained,

• risks related to potential acquisition transactions, including that they may
not be entered into or consummated,

• changes in financial and capital markets,

• general economic conditions within the agricultural industry,

• competitive factors and price changes (principally, sales prices of nitrogen
and methanol products and natural gas costs),

• changes in product mix,

• changes in the seasonality of demand patterns,

• changes in weather conditions,

• changes in environmental and other government regulation,

• changes in agricultural regulations and

• changes in the securities trading markets.

Additional information as to these factors can be found in Terra`s 2008 Annual
Report/10-K, in the sections entitled "Business," "Risk Factors," "Legal
Proceedings," and "Management`s Discussion and Analysis of Financial Condition
and Results of Operations" and in the Notes to the consolidated financial
statements.

Note:Terra Industries` news announcements are also available on its Web site,
www.terraindustries.com.

1 CF has stated that it will adjust its proposed exchange ratio of 0.465 CF
shares per Terra share downward if our proposed special dividend of $7.50 per
share is declared and paid. CF`s proposed exchange ratio would give Terra
shareholders 48.5% of the equity of the combined company without this dividend
adjustment. In addition, adjusting CF`s proposed exchange ratio for CF`s
proposed "Contingent Future Shares" could result in an actual exchange ratio of
0.4224 CF shares per Terra share without this dividend adjustment, or 46.1% of
the combined company, which is also lower than CF`s initial offer nine months
ago.

Terra Industries Inc.
Joe A. Ewing, 712-277-7305
Vice President, Investor Relations
jewing@terraindustries.com
or
Joele Frank, Wilkinson Brimmer Katcher
Matthew Sherman/Jamie Moser
212-355-4449
msherman@joelefrank.com/jmoser@joelefrank.com
or
MacKenzie Partners, Inc.
Larry Dennedy/Laurie Connell
800-322-2885
terraproxy@mackenziepartners.com

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