Notes to the consolidated financial statements
137
34 Commitments and contingencies (continued)
Ahold at a glance
Business review
Governance
Financials
Ahold
Annual Report 2015
At the end of 2015, the remaining provision relating to BI-LO and Bruno's was €19 million (2014: €24 million) with a related tax benefit offset of €8 million (2014: €10 million). This amount represents Ahold's best estimate of
the discounted aggregate amount of the remaining lease obligations and associated charges, net of known mitigation offsets, which could result in cash outflows for Ahold under the various lease guarantees. Ahold continues
to monitor any developments and pursue its mitigation efforts with respect to these lease guarantee liabilities.
Ahold has provided corporate guarantees to certain suppliers of Ahold's franchisees or non-consolidated entities. Ahold would be required to perform under the guarantee if the franchisee or non-consolidated entity failed to
meet its financial obligations, as described in the guarantee. Buyback guarantees relate to Ahold's commitment to repurchase stores or inventory from certain franchisees at predetermined prices. The buyback guarantees refect
the maximum committed repurchase value under the guarantees. The last of the corporate and buyback guarantees expire in 2023.
Representations and warranties as part of the sale of Ahold's operations
Ahold has provided, in the relevant sales agreements, certain customary representations and warranties including, but not limited to, completeness of books and records, title to assets, schedule of material contracts and
arrangements, litigation, permits, labor matters, and employee benefits and taxes. These representations and warranties will generally terminate, depending on their specific features, a number of years after the date of the
relevant transaction completion date.
Closing date
Local currency
million
Contingent liability cap
million
Disco1
November 1, 2004
€15
15
BI-LO Bruno's
January 31, 2005
$33
30
Tops Markets
December 3, 2007
$70
64
Tops' Wilson Farms Sugarcreek
December 3, 2007
$5
5
Ahold C
likelihood to be liable up to the amount of the contingent liability cap to be remote. The cap does not include Ahold's indemnification obligation relating to the litigation described below.
The most significant sales of operations are described below. In addition, specific, limited representations and warranties exist for certain of Ahold's smaller divestments in 2004, 2005, 2007 2012, 2013 and 2014.
The aggregate impact of a claim under such representations and warranties is not expected to be material.
Bradlees
In 1992, Stop Shop spun off Bradlees Stores, Inc. (Bradlees) as a public company (the Bradlees Spin-off). In connection with the Bradlees Spin-off, Stop Shop assigned to Bradlees certain commercial real property
leases. Pursuant to a 1995 reorganization of Bradlees and a subsequent wind-down and liquidation of Bradlees following a bankruptcy protection fling in 2000 (collectively, the Bradlees Bankruptcies), a number of such real
property leases were assumed and assigned to third parties. Pursuant to applicable law, Stop Shop may be contingently liable to landlords under certain of the leases assigned in connection with the Bradlees Spin-off and
subsequently assumed and assigned to third parties in connection with the Bradlees Bankruptcies.
Disco
Ahold is required to indemnify the buyers of Disco S.A. (Disco) and Disco for certain claims made by alleged creditors of certain Uruguayan and other banks. For additional information, see the Uruguayan litigation described
in the Legal proceedings section of this Note. Ahold's indemnification obligation relating to this litigation is not capped at a certain amount nor restricted to a certain time period.
BI-LO Bruno's
In connection with the sale of BI-LO and Bruno's, Ahold may be contingently liable to landlords under guarantees of some 200 BI-LO or Bruno's operating or finance leases that existed at the time of the sale in the event of
a future default by the tenant under such leases. As a result of the bankruptcy flings by BI-LO and Bruno's during 2009, a provision was recognized in 2009. BI-LO exited bankruptcy in May 2010 and the Company has
re-evaluated its estimate of liability. For more information, refer to the Guarantees section of this Note.
