* Terra to return $750 million in special dividend
* Special dividend to be about $7.50/shr cash in Q4
* Also plans debt financing, debt buyback
By Michael Erman
NEW YORK, Sept 24 (Reuters) - Fertilizer maker Terra Industries Inc TRA.N, which is fending off a hostile bid from rival CF Industries Holdings Inc (CF.N), on Thursday said it plans to return about $750 million to its shareholders through a special dividend in the fourth quarter.
The company also said it plans to launch a new debt financing to raise up to $600 million and that one of its units will buy back some of its debt.
Terra said the dividend would amount to around $7.50 a share in cash for each share. It said after the dividend, a debt buyback of unit Terra Capital’s outstanding 7 percent senior notes due 2017 and a $600 million financing, it would have around $500 million cash on its balance sheet.
“The stabilization in financial markets allows us to recalibrate our balance sheet while positioning Terra to continue to take advantage of opportunities to acquire assets,” Terra Chief Executive Michael Bennett said in a statement.
The company has been working since January to shrug off a takeover offer from CF Industries, which said in August that it was prepared to pay 0.465 shares for every Terra share.
That would place CF’s bid at around $4 billion, or around $40.28 for every Terra share. Terra’s shares closed at $36.49 on the New York Stock Exchange on Thursday.
“I think that it’s a strategy to make themselves less appealing,” said Charlie Rentschler, an analyst with Wall Street Access. “They’re trying to get rid of some of the spoils and make themselves a little less attractive.”
CF Industries has put a slate of three directors up for election at Terra’s annual meeting, which is scheduled for Nov. 19. The company said it was still interested in a deal.
“We remain committed to a business combination with Terra and are reviewing their latest announcement,” a CF spokeswoman said.
CF is also the subject of its own hostile bid from Canada’s Agrium Inc. AGU.TO (Additional reporting by Anna Driver in Houston; editing by Carol Bishopric)