Terra Announces Mandatory Conversion Of Preferred Shares

Terra Industries Inc. (NYSE: TRA) announces that on March 15, 2010, all outstanding shares of its 4.25% Series A Cumulative Convertible Perpetual Preferred Shares (preferred shares) will convert to Terra common stock at a rate of 120.4819 shares of common stock per preferred share.

Based on the 500 preferred shares currently outstanding, Terra will issue 60,241 shares of its common stock upon conversion. The shares of common stock will be exempt from registration under Section 3(a)(9) of the Securities Act of 1933, as amended. The regular quarterly dividend on the preferred shares will be paid on March 15, 2010. After the mandatory conversion date of March 15, 2010, dividends on the preferred shares will cease to accrue and no preferred shares will remain outstanding.

Terms of the conversion are governed by provisions found in Section 8 of Terra’s company charter.

A notice of conversion will be mailed to holders of record of the preferred shares by the close of business on Feb. 26, 2010. Holders of preferred shares with questions about the conversion should contact Computershare Trust Company, N.A., at [phone].

About TerraTerra Industries Inc., with 2009 revenues of $1.6 billion, is a leading North American producer and marketer of nitrogen products.

Forward-Looking StatementsCertain 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. 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:

• risks related to potential acquisition transactions,
• 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 regulations,
• 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 and in Terra’s subsequent Quarterly Reports on Form 10-Q, in each case 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.