Ahold Annual Report 2003 83
Operating and Financial Review and Prospects
(EUR 362 million) back-up investment commitment
to support the variable certificate investment amounts
outstanding at that time. On December 17, 2003, we
cancelled the remaining availability under the back-up
investment commitment.
Shareholders' agreement
As part of our real estate operations in the Czech
Republic, our wholly-owned subsidiary Ahold Czech
Republic and AM Development International B.V.
("AM") (previously known as Multi Development
Corporation B.V.), a Dutch real estate developer active
in the Czech Republic, and pursuant to a shareholders'
agreement, Ahold Czech Republic is required to act as
"interim" end investor and purchase 50% of the project
if, at the completion of any of our joint shopping center
development projects, Ahold Czech Republic and AM
are unable to find a third-party purchaser for that
project. The purchase price would be based on the
development costs of the project, including
management fees paid to AM and us during the course
of the project. If the project were then sold to a third-
party purchaser within two years of the interim sale, we
would be required to divide the profits we make on the
sale with AM in accordance with a schedule included in
the shareholders' agreement. If the project cannot be
sold to a third-party purchaser within two years of the
interim sale, then AM, or an affiliated company, thereof
must pay us 20% of the management fees received by
it from the project. Ahold Czech Republic and AM
currently have two development projects under
construction, both of which are expected to be
completed by year-end 2004 and for which no investor
has yet been found.
Joint ventures
Currently, we are party to four joint ventures relating to
activities in Scandinavia, Portugal, Spain and South
America. For a discussion of our servicing and financing
obligations relating to our joint ventures, please see Note
28 to our consolidated financial statements included in
this annual report.
Put and call options
We have entered into the following put and call options,
as described below: the ICA Put Option, the Paiz Ahold
put option, the Luis Paez put/call option, the CRC Ahold
Thailand call option and the put/call option for a
development project in RDCH.
As discussed in "Risk Factors - We have
contingent liabilities to our joint venture partners," under
the Shareholders' Agreement dated as of February 24,
2000, in connection with our ICA joint venture, we are
contingently liable pursuant to put arrangements with
our joint venture partners, IFAB and Canica (together
with IFAB, the "ICA Partners"). Under 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 we are 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, we also are
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 the ICA Put Option is exercised, we and the
selling ICA Partner must negotiate the price of the
Option Shares in good faith. If we and the selling ICA
Partner cannot agree on a price, the price will be
determined using a valuation procedure, which varies
depending on the period in which the ICA Put Option is
exercised. Pursuant to the Shareholders' Agreement,
and the ICA partners jointly appointed an independent
valuation expert to perform the first steps of the
valuation procedure, which have been competed.
However, we, IFAB and Canica currently are not in
agreement with respect to valuation by the independent
valuation expert. Canica has initiated an arbitration
proceeding challenging the valuation by the
independent valuation expert. We cannot assure you the
outcome of the arbitration proceeding.
However, we, IFAB and Canica currently are not in
agreement with respect to valuation by the independent
valuation expert. Canica has initiated an arbitration
proceeding challenging the valuation by the
independent valuation expert. We cannot assure
you as to the outcome of the arbitration proceeding.
We currently cannot determine the actual price
we would have to pay for the Option Shares upon the
exercise of the ICA Put Option. Nonetheless, we retained
an external valuation expert and based on the valuation
by that expert, we estimated that we would have been
required to pay an amount of approximately EUR 2.1
billion for all of the Option Shares held by the ICA
Partners, if the ICA Put Option had been exercisable,
and had been exercised in full, as of year-end 2003.
For additional information about the ICA Put Option, see
Note 30 and Note 31 to our consolidated financial
statements included in this annual report.
Under the terms of the Shareholders' Agreement
in connection with our joint venture, Paiz Ahold, we are
also contingently liable pursuant to a put arrangement
with the Paiz family, which controls Coban Holdings Inc.,
our joint venture partner in Paiz Ahold. Pursuant to the
put arrangement, we have the obligation to purchase the
Paiz family's interest in Paiz Ahold should the Paiz
family's indirect interest in CARHCO fall from its current
level of 3373% to less than 1373%. If we cannot agree
with the Paiz family on a valuation, the option shares will
be purchased by us at fair market value to be
determined by an independent third-party valuation
in accordance with the terms of the Paiz Ahold
shareholders' arrangement. Subject to limited
