Operating and Financial Review and Prospects
74
Ahold Annual Report 2003
Operating and Financial Review and Prospects
During 2002 and 2001, we issued debt of EUR 40
million and EUR 3.1 billion, respectively, under our
EMTN program. For more information about these debt
issuances and offerings, please see "Other Borrowings"
below. In 2003 and 2001 we raised approximately EUR
2.9 billion and EUR 2.5 billion, respectively, in net
proceeds from equity offerings. For additional
information about these equity offerings, please see
"Equity and Equity Offerings" below.
For a detailed discussion of our debt, please see
Note 24 to our consolidated financial statements
included in this annual report.
Other borrowings
We are party to an EMTN program, under which, and
subject to market conditions, we can issue senior or
subordinated and rated or unrated notes denominated
in any currency agreed between us and the relevant
dealer. The maximum amount of notes issuable under
the EMTN program was EUR 7.0 billion as of year-end
2003. Notes issued under the EMTN program contain
customary restrictive covenants, including negative
pledge covenants. As of year-end 2003, using the
applicable exchange rates at year-end 2003, we had
outstanding an aggregate of EUR 4.3 billion in notes
under the EMTN program, and using the applicable
exchange rates at time of issuance, we had outstanding
an aggregate of EUR 5.0 billion in notes under the
EMTN program. The notes have maturity dates ranging
from 2005 through 2031. Most recently, we issued a
EUR 40 million note under this EMTN program on
February 5, 2002, with an interest rate of 5.625% and a
maturity of December 17, 2008.
On August 2, 1999, we obtained a EUR 22.5
million loan from AH Vaste Klanten Fonds ("AHVKF" or
"Dutch Customer Fund") bearing a fixed interest rate of
4.3%. This loan matured on February 3, 2004, and was
rolled over, including accrued interest of EUR 1.9 million,
until February 12, 2004, when it was repaid in full.
On June 14, 2002, we obtained a EUR 50 million
loan from Credit Agricole with a floating interest rate of
EURIBOR 0.4% and a maturity date of June 14,
2007. In addition, during the course of 2002, our
Spanish subsidiary, Ahold Supermercados, restructured
its external debt in an effort to reduce its number of
banking relationships. As a result, four credit facilities in
the aggregate amount of EUR 162 million were
established or extended.
On July 16, 2002, in connection with our
contingent liabilities relating to VRH, we received a
default notice from one of VRH's lenders, which
subsequently triggered defaults under all of the VRH
loans. As a result, we purchased the shares of DAIH
that had been pledged by VRH to the lenders in
connection with those loans for total consideration of
approximately USD 448 million and assumed other debt
of VRH. We obtained a portion of the funding for this
transaction by obtaining a EUR 158 million loan from
ABN AMRO on August 6, 2002, with a floating interest
rate of EURIBOR plus 0.63%, which was subsequently
repaid on March 5, 2003. Furthermore, we were
required to write off a USD 5 million unsecured loan that
we had granted to VRH. For additional information about
VRH and DAIH, including the VRH loans, please see
"Significant Factors Affecting Results of Operations in
2003 and 2002 - Loss on Related Party Default
Guarantee" above and Note 9 to our consolidated
financial statements included in this annual report.
For cash management purposes, including the
issuance of letters of credit, our operating companies
also maintain uncommitted and committed credit lines.
Immediately following the announcement of February
24, 2003, a number of committed and uncommitted
credit lines at our operating company level were
cancelled, reduced or restricted, either to the amount of
borrowings outstanding at the time or else with respect
to the use of those borrowings. As of December 28,
2003, the aggregate capacity of these committed and
uncommitted credit lines, excluding the December 2003
Credit Facility, was EUR 720 million, all of which
capacity was under uncommitted facilities.
In 2003, we obtained a EUR 35 million loan from
AHVKF, dated February 3, 2003, with an interest rate of
3.0% and a maturity date of February 3, 2005. We used
this loan to partially refinance a maturing EUR 45.5
million loan with an interest rate of 4.83% issued to us
by AHVKF on February 3, 2001. The EUR 35 million
loan was callable, in part or in whole, at any time, and
was called by AHVKF and repaid by us in three
tranches. We repaid EUR 15 million on February 25,
2003, EUR 10 million on February 26, 2003, and the
balance of EUR 10 million on February 27, 2003.
On August 4, 2003, we obtained a EUR 44 million
callable loan from AHVKF for general liquidity purposes,
with a one month maturity and a fixed interest rate of
5.2%. This loan was repeatedly rolled over upon maturity
until, on February 12, 2004, it was repaid in full.
During 2003, in addition to repaying and replacing
our 2002 Credit Facility and March 2003 Credit Facility
and repaying the debt described above, we repaid the
following long-term debt upon its maturity:
on March 5, 2003, we repaid upon maturity the
EUR 158 million loan issued to us by ABN AMRO
on August 6, 2002, which had an interest rate of
EURIBOR plus 0.63%;
on March 13, 2003, in connection with entering
into the secured tranche of the March 2003 Credit
Facility, we repaid the USD 25 million loan issued
to Bompreqo by Banco Sudameris de Investimento
S.A. on December 18, 2001, which had a floating
interest rate of LIBOR plus 0.45% and an original
maturity date of February 12, 2006;
on March 17, 2003, we repaid EUR 5 million on a
EUR 22.7 million loan issued to us by AHVKF on
August 3, 2001, which had interest rate of 4.5%
and an original maturity date of August 3, 2003
after it was called at the lender's discretion;
on April 22, 2003, in connection with entering into
the secured tranche of the March 2003 Credit
Facility, we made an aggregate payment of USD
