Terra says RiskMetrics reaches 'flawed conclusion'

* RiskMetrics had advised for CF nominees

* Terra blasts that opinion, citing "convoluted" logic

By Ernest Scheyder

NEW YORK, Nov 16 (Reuters) - Fertilizer maker Terra Industries Inc TRA.N blasted a RiskMetrics Group's report on Monday that advised Terra shareholders to elect board members supported by rival CF Industries Holdings Inc (CF.N).

The report by RiskMetrics, a proxy advisory firm, used "convoluted and contradictory reasoning to reach a fundamentally flawed conclusion," Terra said in a statement.

CF has been trying to buy Terra since last January, but Terra's current board has consistently said CF's offer undervalues the company.

CF has taken its offer hostile and at Terra's annual meeting on Friday will ask shareholders to elect its three nominees to Terra's board of directors.

The election is widely seen as a referendum on CF's offer, and will give Terra shareholders the first major opportunity to voice their opinions on the deal.

RiskMetrics' reports are largely respected on Wall Street, though two rival proxy advisory firms had voiced support for Terra's own board nominees.

In the statement on Monday, Terra detailed several concerns with the RiskMetrics report, claiming the firm cited CF's offer as inadequate, used flawed analysis and miscalculated its historical trading multiples.

CF has offered Terra shareholders $24.50 cash and .1034 CF share for every Terra share. Terra shareholders will also receive a $7.50 special dividend, regardless of whether Terra reaches a deal with CF.

Terra's annual meeting is scheduled for Friday in New York. CF is currently the target of a hostile takeover bid from Canada's Agrium Inc (AGU.TO).

The current value of the bid is $32.80 without the dividend and $40.30 with the dividend. Terra shares closed Friday at $37.74, and fell 47 cents to $37.27 in premarket trading on Monday. (Reporting by Ernest Scheyder, editing by Maureen Bavdek)