NOVA awaits regulatory OK; CF, Terra, Agrium battle; Ch. 11 unlikely for Blockbuster: analyst

By Cristal Cody

Tupelo, Miss., April 14 - NOVA Chemicals Corp. told Prospect News on Tuesday that all regulatory filings are underway now that shareholders have approved the $6.00-a-share cash buyout by International Petroleum Investment Co. of Abu Dhabi.

Also on Tuesday, a back-and-forth battle appears underway between CF Industries Holdings, Inc., Agrium Inc. and Terra Industries Inc.

In other action, Blockbuster Inc.'s lenders probably will not force the company into bankruptcy, an analyst said.

Meanwhile on Wall Street, dismal retail sales stalled a rally in stocks.

The Dow Jones Industrial Average lost 137.63 points, or 1.71%, to close at 7,920.18.

The Standard & Poor's 500 index fell 17.23 points, or 2.01%, to 841.50, and the Nasdaq Composite index dropped 27.59 points, or 1.67%, to close at 1,625.72.

NOVA Chemicals takeover

About 98% of votes cast by NOVA Chemicals shareholders on Tuesday were in favor of the chemicals and plastics manufacturer's $500 million takeover, which is valued at $2.3 billion with the assumption of NOVA's debt.

NOVA spokesman Greg Wilkinson told Prospect News on Tuesday that regulatory approvals are the last step for the deal.

The takeover must receive clearances from several agencies, including the U.S. Department of Justice; the U.S. Federal Trade Commission; Industry Canada, a Canadian government department; and the European Commission.

Calgary, Alta.-based NOVA has plants in Canada, the United States and Europe.

"The ones that are the most substantial are in Canada and the U.S., and those have been filed and are being processed," Wilkinson said of regulatory applications. "We don't think there are any obstacles in the regulatory filings to the closing date."

NOVA said it expects the deal to close in late May or early June.

Shares dropped a penny, or 0.17%, to close at $5.84 on Tuesday.

Terra makes move

As one analyst told Prospect News, "the war of the words" continues in the three-way fertilizer battle between CF Industries, Agrium and Terra Industries.

CF Industries has rejected Calgary, Alta.-based Agrium's unsolicited $3.6 billion takeover offer while it pushes forward in its hostile takeover attempt of Terra Industries.

"This is going to be going on for months," the analyst said.

This time, CF Industries is trying to ward off Terra's defense against the $30.50-a-share hostile takeover attempt.

Apparently, Terra purchased 100 shares of CF Industries stock and made a "demand" for a list of stockholders, according to CF Industries.

On Tuesday, Stephen Wilson, CF Industries' chairman, president and chief executive officer, sent a reply to Terra president and CEO Michael Bennett.

"We want to give you the opportunity to explain to the Terra stockholders, and to us, why you appear to be more interested in communicating with our stockholders than in negotiating a merger agreement with us," Wilson said.

"We also note that, although your by-laws require you to hold your annual meeting no later than May 15, you have not announced the time and place of your meeting. We would appreciate an explanation as to why you have not yet announced your meeting arrangements."

Representatives of Sioux City, Iowa-based Terra were not immediately available for comment.

On Monday, Agrium discounted proxy advisory firm RiskMetrics Group, Inc.'s recommendation that CF Industries shareholders throw their support behind CF Industries' board nominees rather than withhold votes as the agricultural producer had requested.

Deerfield, Ill.-based CF Industries will hold its shareholders meeting on April 21.

Shares of CF Industries rose 74 cents, or 1.01%, to close at $73.71 on Tuesday.

Terra's stock rose 44 cents, or 1.55%, to end at $28.85.

Agrium shares closed up $1.09, or 2.76%, at $40.62 on Tuesday.

Blockbuster forges on

Although Standard & Poor's downgraded Blockbuster's corporate credit rating to CCC from B- on Monday because of liquidity concerns, one analyst said the company should pull through.

"Overall, we remain confident Blockbuster's lenders will not force a Ch. 11 filing, largely because the value of the unhampered operations exceeds the liquidation value of the company's assets, in our view," Richard Ingrassia, an analyst with Roth Capital Partners LLC, said in a research note released to Prospect News on Tuesday.

Ingrassia estimates Blockbuster will report $146.7 million in operating cash flow for fiscal year 2009.

"We believe the company will use this cash from operations to pay down portions of its existing debt facilities," he said. "Management has currently placed its store upgrade plan on hold as it conserves cash to satisfy debt obligations."

Shares of the Dallas-based movie and game rental chain fell to a yearly low of 13 cents in March on bankruptcy fears.

The stock lost 1 cent, or 1.25%, to close at 79 cents on Tuesday.

Mentioned in this article:

Agrium Inc. NYSE: AGU

Blockbuster Inc. NYSE: BBI

CF Industries Holdings, Inc. NYSE: CF

NOVA Chemicals Corp. NYSE: NCX

Terra Industries Inc. NYSE: TRA

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