00 Ahold ANNUAL REPORT 2002 167
BOARD GOVERNANCE HIGHLIGHTS OPERATING REVIEW FINANCIAL INVESTOR REL AT IONS
workers' compensation self-insurance). We believe that our letter of credit requirements will continue to increase and that
we will be required to post significantly greater amounts in the future, particularly with respect to workers' compensation
coverage by third parties.
Put/call arrangements
Ahold has entered into various put and call options in the past in connection with some of its acquisitions. These put and call
options include: the Paiz Ahold put option, the ICA put option, the CRC. Ahold Co. Ltd. call option and the Luis Paez S.A.
put/call option. Furthermore, there is a put/call option for a development project in Ahold Real Estate Czech Republic B.V.
Paiz Ahold Put Option
Under the shareholders agreement relating to the Paiz Ahold joint venture, a put arrangement exists with the Paiz Family,
one of the Company's joint venture partners, pursuant to which Ahold has the obligation to purchase the Paiz family's
interest in Paiz Ahold should the Paiz family's indirect interest in CARHCO falls below 13.33%. If Ahold and the Paiz
family cannot agree on a valuation for the family's interest in Paiz Ahold, the family's interest will be purchased at fair
market value to be determined by an independent third-party valuation in accordance with the terms of the Paiz Ahold
shareholders agreement. Furthermore, subject to limited exceptions, neither the Paiz Family nor Ahold may transfer its
interest in Paiz Ahold prior to January 2007.
ICA Ahold AB put option
Under the shareholders' agreement dated as of February 24, 2000, relating to Ahold's joint venture, ICA Ahold Holding AB
("ICA"), Ahold is contingently liable pursuant to put arrangements with its joint venture partners, ICA Förbundet Invest AB
("IFAB") and Canica AS ("Canica," and together with IFAB, the "ICA Partners"). Under this put option arrangements (the
"ICA Put Option"), each of the ICA Partners has the right of first refusal with respect to the sale of the shares in ICA of
the other ICA Partner. If one of the ICA Partners is offered the shares of the other ICA Partner constituting no less than
5% of the outstanding shares of ICA (the "Option Shares") and opts not to purchase the Option Shares, the selling ICA
Partner may exercise its ICA Put Option pursuant to which Ahold is obligated to purchase the Option Shares for cash.
If the selling ICA Partner is exercising its ICA Put Option with respect to all of the ICA shares held by that ICA Partner,
Ahold also is obligated to offer to purchase all of the shares held by the non-selling ICA Partner on the same terms and
conditions as those applicable to the sale of the Option Shares. The ICA Put Option may be exercised beginning on
April 27, 2004.
If an ICA Put Option is exercised, Ahold and the selling ICA Partner must negotiate the price of the Option Shares in good
faith. If Ahold and the selling ICA Partner cannot agree on a price, the price will be determined using a valuation procedure,
which varies depending on the periods in which the ICA Put Option is exercised, as described in more detail below. If the
ICA Put Option is exercised prior to April 27, 2005, the valuation of the Option Shares (if the parties cannot agree to the
price of the shares) will be performed by an independent valuation expert. The valuation procedure must use a formula
equal to the fair market value of the Option Shares to be put to Ahold (not including any control premium) at the time of
exercise multiplied by a premium rate equal to the price Ahold paid to acquire its 50% interest in ICA divided by the fair
market value (not including any control premium or assumed future synergies resulting from the acquisition) of the shares
of ICA that were purchased at the time of acquisition. If the ICA Put Option is exercised on, or after, April 27, 2005, and
the parties cannot agree on the price of the Option Shares being sold, the valuation of the Option Shares will be performed
by three independent valuation experts using a formula based on the acquisition value of ICA, as well as an amount
reflecting the premium that would be expected to be paid in a transfer of the full control of ICA. Under the shareholders'
agreement of ICA, Ahold is able to nominate a majority of the members of ICA's board of directors if Ahold acquires more
than 70% of the voting rights and shares of ICA.
Since the value of ICA may change and is subject to negotiations, Ahold currently cannot determine the price it would
have to pay for the Option Shares upon the exercise of the ICA Put Option, or the likelihood that one or both of the ICA
Partners will exercise the ICA Put Option. However, based on (i) the estimated value of ICA as of fiscal year-end 2002, as
determined by a valuation expert engaged by us, and (ii) completion of the first steps of the valuation procedure described
above on October 6, 2003, performed by an independent valuation expert, we expect that in the event of an exercise of
the ICA Put Option on all the option shares, we would have to pay an amount of approximately EUR 1.8 billion for all of
the Option Shares held by the ICA Partners, subject to variations in the market conditions that may occur and unknown
parameters in the second and final step of the valuation procedure to be performed, which is likely to happen in 2004.
Under Dutch GAAP, no liability is recorded to reflect the amounts that would be payable if the ICA Put Option were to be
exercised, because purchasing the Option Shares, if they were put to Ahold, would not put Ahold in an onerous situation.
Under US GAAP the estimated fair value of the ICA Put Option, but not the shares themselves, is recorded as a liability
as further discussed in Note 31.
