Notes 26, 27
Financial statements - Notes to the consolidated financial statements
The margin, letter of credit fee and commitment fee, as
referred to above, are subject to the following pricing grid
based on Ahold's corporate credit rating:
27 Other non-current financial liabilities
Credit rating1
Margin/letter of credit fee
Commitment fee of
the applicable margin)
BB/Ba2
0.75%
40%
BB+/Ba1
0.675%
40%
BBB-/Baa3
0.4%
35%
BBB/Baa2
0.325%
35%
BBB+/Baa1 or higher
0.275%
35%
1 As of December 31, 2006, Ahold's rating from Moody's Investors Services ("Moody's") is
Ba1 with a positive outlook and from Standard Poor's Ratings Services ("S&P") BB+
with a positive outlook.
In the event that Ahold draws loans (excluding letters of
credit) in excess of EUR 1,000, then Ahold will have to pay
additionally a utilization fee of 10 basis points on the amount
exceeding EUR 1,000.
Covenants
The May 2005 Credit Facility contains customary covenants
that place restrictions on disposals, mergers, acquisitions,
investments and the incurrence of debt by Ahold's
subsidiaries. The facility is subject to a leverage covenant,
which falls away, along with the restrictions with respect to
acquisitions and disposals, as well as a part of the restriction
to incur financial indebtedness, when Ahold's corporate
rating is BBB/Baa2 or better. The leverage covenant requires
Ahold not to exceed a maximum ratio, as defined in the
May 2005 Credit Facility, of consolidated net borrowings to
consolidated earnings before interest, tax, depreciation,
amortization and exceptional and/or extraordinary items of
4.28:1.
Events of default/ranking
The May 2005 Credit Facility contains customary events of
default, among others, non-payment, misrepresentations,
covenant breaches, cross-default and insolvency and
provisions on mandatory prepayment in the event of a
change in control in respect of the Company. If an event of
default was to occur and remain outstanding in excess of
any applicable remedy period, it is expected that all amounts
outstanding under the Credit Facility would immediately
become due and payable. The May 2005 Credit Facility
ranks at least pari passu with all existing unsecured third-
party payment obligations, except for obligations
mandatorily preferred by law.
December 31,
January 1,
2006
2006
Finance lease liabilities
1,218
1,298
Cumulative preferred financing shares
497
666
Derivative financial instruments
183
175
Financial guarantees
7
7
Total other non-current financial liabilities
1,905
2,146
For more information on derivative financial instruments,
see Note 33.
Finance lease liabilities
The aggregate amounts of minimum finance lease liabilities
to third parties, under non-cancelable finance lease
contracts for the next five years and thereafter are as follows:
December 31,
January 1,
2006
2006
2007
169
182
2008
167
176
2009
158
172
2010
153
168
2011
149
156
Thereafter
1,625
1,753
Total future minimum finance lease payments
2,421
2,607
Interest portion
(1,144)
(1,245)
Present value of net minimum finance lease payments
(finance lease liabilities)
1,277
1,362
Current portion of finance lease liabilities
(59)
(64)
Non-current portion of finance lease liabilities
1,218
1,298
Finance lease liabilities payable after five years
989
1,056
Finance lease liabilities are principally for buildings. Terms
range from 10 to 25 years and include renewal options if it is
reasonably certain, at the inception of the lease, that they will
be exercised. At the time of entering into finance lease
agreements, the commitments are recorded at their present
value using the interest rate implicit in the lease, if this is
practicable to determine; if not, the operating company
specific interest rate applicable for long-term borrowings is
used. As of December 31, 2006, the finance lease liabilities
are recorded at their present value at an average interest rate
of 9.5 percent (January 1, 2006: 9.2 percent).
Certain store leases provide for contingent additional rentals
based on a percentage of sales. Substantially all of the store
leases have renewal options for additional terms. None of
Ahold's leases impose restrictions on the ability of Ahold to
pay dividends, incur additional debt, or enter into additional
leasing arrangements.
During 2006, interest expense on finance lease liabilities
was EUR 125 (2005 and 2004: EUR 119 and EUR 111,
respectively). Total future minimum sublease payments
expected to be received under non-cancelable subleases
at the balance sheet date is EUR 290. There were no
contingent rents recognized as expense during the period.
102 Ahold Annual Report 2006
