UNITED STATES
SECURITIES EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------------------------------------------------------
SCHEDULE 13G
Under the Securities Exchange Act of 1934
(Amendment No. 3)
TERRA INDUSTRIES INC.
---------------------
(Name of Issuer)
Common Stock, no par value per share
------------------------------------
(Title of Class of Securities)
880915103
---------
(CUSIP Number)
December 16, 2006
-----------------
(Date of Event which Requires Filing of this Statement)
Check the appropriate box to designate the rule pursuant to which this
Schedule is filed:
[ ] Rule 13d-1(b)
[X] Rule 13d-1(c)
[ ] Rule 13d-1(d)
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter the disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Continued on following pages
Page 1 of 11 Pages
SCHEDULE 13G
CUSIP No.: 880915103 Page 2 of 11 Pages
................................................................................
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SAB CAPITAL PARTNERS, L.P.
................................................................................
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
................................................................................
3. SEC Use Only
................................................................................
4. Citizenship or Place of Organization
Delaware
................................................................................
Number of 5. Sole Voting Power - 0 -
Shares ...........................................................
Beneficially 6. Shared Voting Power 1,729,197
Owned by Each ...........................................................
Reporting 7. Sole Dispositive Power - 0 -
Person With ...........................................................
8. Shared Dispositive Power 1,729,197
................................................................................
9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,729,197
................................................................................
10.
Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
................................................................................
11. Percent of Class Represented by Amount in Row (9)
1.9% based on 92,605,538 shares outstanding as of October 23, 2006.
................................................................................
12. Type of Reporting Person:
PN
CUSIP No.: 880915103 Page 3 of 11 Pages
................................................................................
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SAB CAPITAL PARTNERS II, L.P.
................................................................................
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
................................................................................
3. SEC Use Only
................................................................................
4. Citizenship or Place of Organization
Delaware
................................................................................
Number of 5. Sole Voting Power - 0 -
Shares ...........................................................
Beneficially 6. Shared Voting Power 33,019
Owned by Each ...........................................................
Reporting 7. Sole Dispositive Power - 0 -
Person With ...........................................................
8. Shared Dispositive Power 33,019
................................................................................
9. Aggregate Amount Beneficially Owned by Each Reporting Person
33,019
................................................................................
10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
................................................................................
11. Percent of Class Represented by Amount in Row (9)
0.04% based on 92,605,538 shares outstanding as of October 23, 2006.
................................................................................
12. Type of Reporting Person:
PN
CUSIP No.: 880915103 Page 4 of 11 Pages
................................................................................
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SAB OVERSEAS MASTER FUND, L.P.
................................................................................
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
................................................................................
3. SEC Use Only
................................................................................
4. Citizenship or Place of Organization
Cayman Islands
................................................................................
Number of 5. Sole Voting Power - 0 -
Shares ...........................................................
Beneficially 6. Shared Voting Power 1,475,390
Owned by Each ...........................................................
Reporting 7. Sole Dispositive Power - 0 -
Person With ...........................................................
8. Shared Dispositive Power 1,475,390
................................................................................
9. Aggregate Amount Beneficially Owned by Each Reporting Person
1,475,390
................................................................................
10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
................................................................................
11. Percent of Class Represented by Amount in Row (9)
1.6% based on 92,605,538 shares outstanding as of October 23, 2006.
................................................................................
12. Type of Reporting Person:
PN
CUSIP No.: 880915103 Page 5 of 11 Pages
................................................................................
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SAB CAPITAL ADVISORS, L.L.C.
................................................................................
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
................................................................................
3. SEC Use Only
................................................................................
4. Citizenship or Place of Organization
Delaware
................................................................................
Number of 5. Sole Voting Power - 0 -
Shares ...........................................................
Beneficially 6. Shared Voting Power 3,237,606
Owned by Each ...........................................................
Reporting 7. Sole Dispositive Power - 0 -
Person With ...........................................................
8. Shared Dispositive Power 3,237,606
................................................................................
9. Aggregate Amount Beneficially Owned by Each Reporting Person
3,237,606
................................................................................
10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
................................................................................
11. Percent of Class Represented by Amount in Row (9)
3.5% based on 92,605,538 shares outstanding as of October 23, 2006.
................................................................................
12. Type of Reporting Person:
OO
SCHEDULE 13G
CUSIP No.: 880915103 Page 6 of 11 Pages
................................................................................
1. Names of Reporting Persons.
I.R.S. Identification Nos. of above persons (entities only).
SCOTT A. BOMMER
................................................................................
2. Check the Appropriate Box if a Member of a Group
(a) [ ]
(b) [ ]
................................................................................
3. SEC Use Only
................................................................................
4. Citizenship or Place of Organization
United States of America
Delaware
................................................................................
Number of 5. Sole Voting Power - 0 -
Shares ...........................................................
Beneficially 6. Shared Voting Power 3,237,606
Owned by Each ...........................................................
Reporting 7. Sole Dispositive Power - 0 -
Person With ...........................................................
8. Shared Dispositive Power 3,237,606
................................................................................
9. Aggregate Amount Beneficially Owned by Each Reporting Person
3,237,606
................................................................................
10. Check if the Aggregate Amount in Row (9) Excludes Certain Shares (See
Instructions)
[ ]
................................................................................
11. Percent of Class Represented by Amount in Row (9)
3.5% based on 92,605,538 shares outstanding as of October 23, 2006.
................................................................................
12.
Type of Reporting Person:
HC
Page 7 of 11 Pages
This Amendment No. 3 to Schedule 13G amends the initial statement on
Schedule 13G, dated February 14, 2006, and all amendments thereto
(collectively, the "Initial Statement"), filed by the Reporting Persons (as
defined herein). This Amendment No.3 is being filed by the Reporting Persons
to report that the number of Shares (as defined herein) that the Reporting
Persons may be deemed to beneficially own has decreased by more than five
percent of the current amount of outstanding Shares. Capitalized terms used
but not defined herein shall have the meaning ascribed to them in the Initial
Statement.
Item 1(a). Name of Issuer:
Terra Industries Inc. (the "Issuer").
Item 1(b). Address of Issuer's Principal Executive Offices:
Terra Centre, P.O. Box 6000, 600 Fourth Street,
Sioux City, Iowa 51102-6000.
Item 2(a). Name of Person Filing:
This Statement is filed on behalf of each of the following
persons (collectively, the "Reporting Persons"):
i) SAB Capital Partners, L.P. ("SAB");
ii) SAB Capital Partners II, L.P. ("SAB II", and together with
SAB, the "Domestic Partnerships");
iii) SAB Overseas Master Fund, L.P. (the "Master Fund");
iv) SAB Capital Advisors, L.L.C. (the "General Partner"); and
v) Scott A. Bommer ("Mr. Bommer").
This Statement relates to Shares (as defined herein) held for
the accounts of each of SAB, SAB II, and the Master Fund. The General Partner
serves as the general partner of each of the Domestic Partnerships and the
Master Fund. Mr. Bommer serves as the managing member of the General Partner.
Any disclosures herein with respect to persons other than the
Reporting Persons are made on information and belief after making inquiry to
the appropriate party.
Item 2(b). Address of Principal Business Office or, if None, Residence:
The address of the principal business office of each of SAB,
SAB II, the Master Fund, the General Partner and Mr. Bommer is 712 Fifth
Avenue, 42nd Floor, New York, N.Y. 10019.
Item 2(c). Citizenship:
i) SAB is a Delaware limited partnership;
ii) SAB II is a Delaware limited partnership;
iii) The Master Fund is a Cayman Islands exempted limited
partnership;
iv) The General Partner is a Delaware limited liability
company; and
v) Mr. Bommer is a citizen of the United States of America.
Page 8 of 11 Pages
Item 2(d). Title of Class of Securities:
Common Stock, no par value per share (the "Shares")
Item 2(e). CUSIP Number:
880915103
Item 3. If This Statement is Filed Pursuant to ss.ss.240.13d-1(b)
or 240.13d-2(b) or (c), Check Whether the Person Filing is a:
This Item 3 is not applicable.
Item 4. Ownership:
Item 4(a). Amount Beneficially Owned:
As of December 20, 2006:
(a) SAB may be deemed to be the beneficial owner of
1,729,197 Shares held for its account;
(b) SAB II may be deemed to be the beneficial owner of
33,019 Shares held for its account;
(c) The Master Fund may be deemed to be the beneficial owner
of 1,475,390 Shares held for its account; and
(d) Each of the General Partner and Mr. Bommer may be deemed
to be the beneficial owner of 3,237,606 Shares held for the accounts of each
of SAB, SAB II, and the Master Fund. This amount includes: A) 1,729,197 Shares
held for the account of SAB; B) 33,019 Shares held for the account of SAB II;
and C) 1,475,390 Shares held for the account of the Master Fund.
Item 4(b). Percent of Class:
(a) The number of Shares which SAB may be deemed to be the
beneficial owner constitutes approximately 1.9% of the total number of
Shares outstanding (based upon information provided by the Issuer in its most
recent quarterly report on Form 10-Q filed with the Securities and Exchange
Commission, there were approximately 92,605,538 shares outstanding as of
October 23, 2006).
(b) The number of Shares which SAB II may be deemed to be the
beneficial owner constitutes approximately 0.04% of the total number of
Shares outstanding.
(c) The number of Shares which the Master Fund may be deemed
to be the beneficial owner constitutes approximately 1.6% of the total
number of Shares outstanding.
(d) The number of Shares which each of the General Partner and
Mr. Bommer may be deemed to be the beneficial owner constitutes approximately
3.5% of the total number of Shares outstanding.
Page 9 of 11 Pages
Item 4(c). Number of Shares of which such person has:
SAB:
----
(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 1,729,197
(iii) Sole power to dispose or direct the disposition of: 0
(iv) Shared power to dispose or direct the disposition of: 1,729,197
SAB II:
-------
(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 33,019
(iii) Sole power to dispose or direct the disposition of: 0
(iv) Shared power to dispose or direct the disposition of: 33,019
The Master Fund:
----------------
(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 1,475,390
(iii) Sole power to dispose or direct the 0
disposition of:
(iv) Shared power to dispose or direct the 1,475,390
disposition of:
The General Partner and Mr. Bommer:
-----------------------------------
(i) Sole power to vote or direct the vote: 0
(ii) Shared power to vote or direct the vote: 3,237,606
(iii) Sole power to dispose or direct the 0
disposition of:
(iv) Shared power to dispose or direct the 3,237,606
disposition of:
Item 5. Ownership of Five Percent or Less of a Class:
If this statement is being filed to report the fact that as of
the date hereof the Reporting Persons have ceased to be the beneficial owners
of more than 5 percent of the Shares, check the following [X].
Item 6. Ownership of More than Five Percent on Behalf of Another Person:
This Item 6 is not applicable.
Item 7. Identification and Classification of the Subsidiary Which
Acquired the Security Being Reported on By the Parent
Holding Company:
See disclosure in Item 2 hereof.
Page 10 of 11 Pages
Item 8. Identification and Classification of Members of the Group:
This Item 8 is not applicable.
Item 9. Notice of Dissolution of Group:
This Item 9 is not applicable.
Item 10. Certification:
By signing below each of the Reporting Persons certifies that,
to the best of their knowledge and belief, the securities referred to above
were not acquired and are not held for the purpose of or with the effect of
changing or influencing the control of the issuer of the securities and were
not acquired and are not held in connection with or as a participant in any
transaction having that purpose or effect.
Page 11 of 11 Pages
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
Date: December 21, 2006 /s/ Michael Casey*
------------------------------------------
Michael Casey, attorney-in-fact for Scott
A. Bommer, individually and as managing
member of SAB Capital Advisors, L.L.C.,
for itself and as the general partner of
(i) SAB Capital Partners, L.P. and
(ii) SAB Capital Partners II, L.P.; and
(iii) SAB Overseas Master Fund, L.P.
-----------------------------------------
/*/ Power of Attorney for Mr. Casey filed with Amendment No. 2 for the
Reporting Persons' Schedule 13G filed on August 10, 2006.