Notes: 20
Cumulative Preferred Financing Shares
142
Ahold Annual Report 2003
Financial Statements
Cumulative Preferred Shares
In March 1989, the Company entered into an agreement (the "Option Agreement") with Stichting Ahold Continuïteit
("SAC"). The Option Agreement of SAC was amended and restated in April 1994, March 1997, December 2001
and December 2003. Pursuant to the Option Agreement, SAC was granted an option (the "SAC Option") for no
consideration to acquire from the Company, from time to time until December 2018, cumulative preferred shares up
to a total par value that is equal to the total par value of all issued and outstanding shares of Ahold's capital stock,
excluding cumulative preferred shares, at the time of exercise of the SAC Option.The Option Agreement provides
for an increase of the total par value of cumulative preferred shares under option, taking into account the new,
increased authorized share capital. The holders of the cumulative preferred shares would be entitled to 2,000 votes
per share and a cumulative dividend expressed as a percentage of the amount called-up and paid-in on the
cumulative preferred shares. The percentage applied is the sum of (i) the average basic refinancing transaction
interest rate as set by the European Central Bank plus 2.1%, and (ii) the average interest margin as set by the
largest credit institution in The Netherlands based on the Company's balance sheet total at the end of the most
recent year. The minimum percentage applied is 5.75%. Subject to limited exceptions, each transfer of cumulative
preferred shares requires the approval of the Corporate Executive Board. Cumulative preferred shares can only
be issued in registered form. No share certificates are issued for cumulative preferred shares.
The Option Agreement and the cumulative preferred shares have certain anti-takeover effects. The issuance
of all authorized cumulative preferred shares will cause substantial dilution of the effective voting power of any
shareholder, including a shareholder that attempts to acquire the Company, and could have the effect of delaying,
deferring and preventing a change in the Company's control.
SAC is a non-membership organization, organized under the laws of The Netherlands. Its statutory purpose
is to enhance the Company's continuity, independence and identity in case of a hostile takeover attempt. In the case
of liquidation, the SAC board of directors will decide on the use of any remaining residual assets. The SAC board
of directors has five members. The five members are appointed by the board itself.
In accordance with the Company's Articles of Association, the Corporate Executive Board of Ahold was designated
as the body authorized to issue or grant rights to subscribe for cumulative preferred financing shares of whatever
series, subject to the prior approval of the Supervisory Board of Ahold, up to a total nominal amount equal to 25% of
all the outstanding shares of the capital stock of Ahold, excluding cumulative preferred shares. Cumulative preferred
financing shares must be fully paid up upon issuance. In accordance with the Articles of Association the Corporate
Executive Board of Ahold must approve any change of ownership of the cumulative preferred financing shares.
Ahold cannot be forced to redeem these shares. In December 2003, concurrently with the rights offering, Ahold
increased the number of authorized cumulative preferred financing shares from 400 million to 500 million and
issued 109,900,000 new cumulative preferred financing shares at an issue price of EUR 0.69 per share.
Dividends are paid on each cumulative preferred financing share at a percentage (the "Financing Dividend
Percentage") based on the average effective yield on Dutch state loans with a remaining life of nine to ten years,
and such rate has been fixed for a period of ten years at a rate of 7.37% per year for the share issued in June
1996, 5.18% per year for the shares issued in August 1998, 6.47% per year for the shares issued in October 2000
and 7.33% per year for the shares issued in December 2003.
Common Shares
Ahold common shares are listed on the Euronext Amsterdam. Ahold has a secondary listing on the Swiss Stock
Exchange in Zurich. Additionally, Ahold common shares are listed on the New York Stock Exchange in the U.S.
in the form of American Depositary Shares ("ADSs"), evidenced by American Depositary Receipts ("ADRs").
The depositary for the ADSs is The Bank of New York. Each ADS evidences the right to receive one common share.
In December 2003, as part of a rights offering, Ahold increased its authorized number of common shares from
1.2 billion to 2.0 billion shares and issued 620,951,317 shares at a price of EUR 4.83 per share. Other shares
issued amounted to 450,000, as discussed in Note 7.
