Notes: 25
25 Financial lease commitments
154
Ahold Annual Report 2003
Financial Statements
Covenants
The December 2003 Credit Facility contains customary covenants that place restrictions on the incurrence of debt
by Albert Heijn and Stop Shop and their subsidiaries, the payment of dividends (other than in relation to preferred
shares) by any Borrower or Guarantor, the redemption of share capital by any Borrower or Guarantor, and the sale of
assets, mergers, liens, sale-leaseback transactions, capital expenditure, acquisitions and investments. Furthermore,
the December 2003 Credit Facility requires Ahold to maintain the following EBITDA to net interest expense and net
debt to EBITDA ratios:
EBITDA to net interest expense
Net debt to EBITDA
Fourth quarter of 2003
2.25 1.00
4.00 1.00
First and second quarter of 2004
2.25 1.00
4.00 1.00
Third and fourth quarter of 2004
3.00 1.00
3.625 1.00
First and second quarter of 2005
4.00 1.00
3.25 1.00
Third and fourth quarter of 2005
4.25 1.00
3.00 1.00
2006
o
O
O
uq
2.75 1.00
Events of default
The December 2003 Credit Facility contains customary events of default, including, without limitation, payment
defaults, breach of representations and warranties, covenant defaults and cross-defaults. If an event of default
occurs, the Lenders are entitled to accelerate the amounts owing under the December 2003 Credit Facility, cancel
all commitments and to take all other actions permitted to be taken by a secured creditor.
Ranking
The December 2003 Credit Facility ranks at least pari passu with all existing unsecured third-party debt.
In the event of enforcement, the interests of the Lenders will rank in priority to all unsecured third-party debt of the
Borrowers, to the extent of the security interests granted in favor of the Lenders. Furthermore, the Lenders' rights
under the December 2003 Credit Facility are contractually senior to intercompany loans provided to the Borrowers,
as these are contractually subordinated to the December 2003 Credit Facility by the relevant intra-group lenders.
Security
The December 2003 Credit Facility will be secured by (1) a stock pledge over the outstanding shares in each of
Stop Shop, S&S Brands, Inc., and Giant Brands, Inc; (2) certain inter-company receivables owed to Stop Shop
(subject to certain agreed exemptions to be set out in the December 2003 Credit Facility); and (c) certain
intellectual property rights connected with the names "Stop Shop" and "Giant" (collectively, the "Security").
If Ahold's credit ratings reach and remain at least at BBB- by S&P and Baa3 by Moody's for a continuous
period of six months or longer, then upon its request, the Lenders will release the Security and terminate all
subordination arrangements; provided that no Event of Default under the December 2003 Credit Facility has
occurred or is continuing and no subsequent ratings downgrade has occurred as at the date of such release. Should
either of Ahold's ratings subsequently fall below these credit ratings, the Security and subordination arrangements
will be promptly reinstated.
Financial lease commitments are principally for buildings and are generally held by Ahold's U.S. subsidiaries. Terms
range from 10 to 25 years and contain renewal options. Components of assets held under capital leases
are as follows:
December 28,
December 29,
2003
2002
Land and buildings
2,546
2,617
Machinery and equipment
69
114
2,615
2,731
Accumulated depreciation
(763)
(782)
1,852
1,949
