Financial statements - Notes to the consolidated financial statements
Note 26
Financing obligations
Mortgages payable
Group credit facility
Financing obligations result trom sale and leaseback transactions in which Ahold (i) has continuing involvement in the
properties sold or (ii) subleases the property to a third-party (including franchisees). Such transactions do not quality tor sale
and leaseback accounting, but rather are accounted tor as a financing. The sale proceeds are recorded as financing obligations
and are amortized over the term of the leaseback. For a detailed description of the accounting policies related to sale and
leaseback transactions, see Note 3.
Of the total non-current amount, EUR 71 matures between one and five years and EUR 461 after five years. The average
interest rate tor the financing obligations amounted to 10.1% in 2005.
As of January 1, 2006, the aggregate amounts of mortgages payable that were collateralized by buildings and land amounted
to EUR 37 (January 2, 2005: EUR 37). Of the total non-current amount, EUR 13 matures between one and five years and
EUR 19 after five years. The average interest rate tor these mortgages payable amounted to 7.23% in 2005 (2004: 7.25%).
On February 15, 2005, Ahold terminated the three-year revolving secured December 2003 credit facility with an original
maturity date of December 17, 2006. Subsequently, Stop Shop entered into a bilateral letter of credit facility (the "L/C
Facility") on that same day. At the time of termination there were no outstanding loans other than the letters of credit, which
were collateralized through a cash deposit of USD 573 in the name of Stop Shop. As a result of the termination of the
December 2003 facility, the unamortized tees and other costs related to that facility have been expensed in full in 2005,
resulting in additional charges in an amount of EUR 17.
On May 17, 2005, Ahold signed a new five-year EUR 2,000 unsecured syndicated multi-currency credit facility (the "May
2005 Credit Facility") with a syndicate of fifteen banks. The May 2005 Credit Facility may be used to draw loans tor working
capital and tor general corporate purposes of the Ahold group and provides tor the issuance of USD 800 of letters of credit.
On May 17, 2005 the aggregate amount of outstanding letters of credit issued under the L/C Facility amounting to USD 554
were in aggregate transferred into the May 2005 Credit Facility and subsequently the L/C Facility was terminated.
As of January 1, 2006, there were no outstanding loans under the May 2005 Credit Facility other than letters of credit
amounting to USD 696.
Interest rate and fees
Under the May 2005 Credit Facility, Ahold is able to borrow at an interest rate of LIBOR (tor borrowings denominated in USD
excluding letters of credit issued under the USD 800 letter of credit tranche) or EURIBOR (tor borrowings denominated in
EUR) plus a margin. Ahold is required to pay a letter of credit tee on the outstanding amount of each letter of credit (issued
under the USD 800 letter of credit tranche).The margin and letter of credit tee are subject to a pricing grid based on Ahold's
corporate credit rating as below:
Lowest rating
Margin letter of credit fee
BBB+/Baa1 or higher
0.275
BBB/Baa2
0.325
BBB-/Baa3
0.40
BB+/Ba1
0.675
BB/Ba2
0.75
As of March 28, 2006, Ahold's rating trom Moody's Investors Services ("Moody's") is Ba1 with a positive outlook and trom
Standard Poor's Ratings Services ("S&P") BB+ with a stable outlook. During 2005 Ahold's rating trom Moody's was Ba2
requiring Ahold to pay tees of 0.85% (applicable letter of credit tee +10 basis points) per annum on the outstanding amount
of each letter of credit. Ahold has to pay a commitment tee on the undrawn, uncancelled amount of the May 2005 Credit
Facility computed per annum (calculated on a daily basis) of 40% of the applicable margin quarterly in arrears it Ahold is rated
at BB+ /Ba1 or lower. The commitment tee will decrease to 35% when Ahold has a rating of BBB-/Baa3 or higher.
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