YAZOO CITY, Miss. – Terra Industries Inc. and Mississippi Chemical Corp. announced that Terra will acquire the outstanding shares of Mississippi Chemical for an estimated value of about $268 million. The transaction will include cash and assumed debt of $161 million and stock of $107 million, and the final value will depend on Terra’s share price and closing adjustments.

Mississippi Chemical and its domestic subsidiaries are currently operating under Chapter 11 of the U.S. Bankruptcy Code. As a result, the purchase agreement and related amended plan of reorganization are subject to approval by the U.S. Bankruptcy Court for the Southern District of Mississippi, as well as other regulatory approvals. Mississippi Chemical intends to file for Bankruptcy Court approval of the purchase agreement and related amended plan of reorganization by the end of August.

Mississippi Chemical’s nitrogen and phosphate businesses will be separated, and the phosphate business will be sold or transferred to the holders of Mississippi Chemical’s 7¼ percent senior notes and Mississippi Phosphates’ 5.8 percent industrial revenue bonds. After confirmation of the amended plan of reorganization, Terra will acquire all the stock of Mississippi Chemical. The transaction is expected to be completed by the first quarter of 2005.

According to company information released by Terra, the acquisition of MCC is expected to strengthen Terra’s fertilizer business in several realms including: • Expand Terra’s product sourcing and distribution capabilities beyond its existing North American and U.K operations by diversifying its asset base in Trinidad and the United States; • Improve Terra’s business risk profile by strengthening Terra’s industrial nitrogen market position and increasing its sourcing from low-cost gas regions; • Provide Terra with new growth opportunities through Mississippi Chemical’s terminal assets in Donaldsonville, La. and Houston, TX. • Yield significant annual cost savings; and • Be accretive to Terra’s earnings and cash flow per share in the first year after closing.

“This is an important step in our efforts to strengthen Terra’s asset base and position the company for the long-term,” says Michael L. Bennett, Terra’s president and CEO. “Expanding our nitrogen manufacturing capabilities and diversifying our natural gas sources have been two important Terra objectives.

“Mississippi Chemical’s 50 percent interest in the Point Lisas, Trinidad ammonia production facility will significantly enhance Terra’s flexibility by lowering production costs in a high natural gas price environment. Mississippi Chemical’s terminal assets in Donaldsonville and Houston provide Terra with access to new markets. We also expect the Yazoo City facility’s mix of upgraded products for agricultural and industrial markets to serve us well.

“This transaction creates a strong platform for improved efficiency and future growth,” adds Bennett. “

The addition of Mississippi Chemical expands Terra’s product sourcing and distribution capabilities and strengthens its industrial nitrogen market position.

“We are confident this transaction will enhance Terra’s earnings power throughout the nitrogen market cycle and deliver significant value to our shareholders,” adds Bennett.

Coley Bailey, chairman and CEO of Mississippi Chemical, says, “We are pleased to reach this agreement with Terra. This transaction is an important step forward in completing the company’s plan of reorganization. We believe it maximizes the value of Mississippi Chemical for our creditors and stakeholders while affording them the unique opportunity to participate in the upside potential of the combined company.

“This transaction reflects the importance and quality of Mississippi Chemical’s people and our outstanding manufacturing capabilities. I thank our employees for their continuing hard work and dedication. We are committed to completing the sale process as expeditiously as possible and ensuring a seamless transition.”

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