SIOUX CITY -- CF Industries on Monday faced the expiration of a $2.5 billion financing deal the fertilizer maker would need to acquire rival Terra Industries.

The commitment CF secured from investment banker Morgan Stanley in early November was to expire at the end of the month if a merger agreement had not been reached.

CF spokesman Terry Hutch said late Monday the company has the option to extend its agreement with Morgan Stanely through Dec. 31. Hutch said it was reasonable to expect the company would issue a public statement if it decided to exercise that clause.

The Morgan Stanely financing, the biggest leveraged loan commitment by a single bank this year, was key to CF's latest bid for Sioux City-based Terra --$24.50 in cash and 0.1034 shares of its stock for every Terra share, which includes a $7.50 per share special cash dividend that Terra shareholders will receive whether the deal is accepted or not. Previous CF offers were all stock exchanges.

CF scored a key victory on Nov. 20 when Terra shareholders elected three CF-backed candidates to Terra's board of directors. Afterward, CF invited Terra to negotiate a settlement, but Terra's board rejected CF's slightly revised bid, saying the price was the same as a proposal Terra's board unanimously rejected on Nov. 1.