The carrying values of long-term debt (excluding finance leases), net of discounts and premiums, deferred transaction costs and hedge accounting fair value adjustments, can be summarized as follows:
|
|
|
|
|
|
|
|
|
|
|
Senior notes, unsecured
|
5.70%
|
2040
|
USD
|
445
|
430
|
—
|
|
Debentures, unsecured
|
9.00%
|
2031
|
USD
|
208
|
201
|
553
|
|
Notes, unsecured
|
8.05%
|
2027
|
USD
|
53
|
51
|
84
|
|
Retail bond, unsecured
|
4.25%
|
2018
|
EUR
|
400
|
—
|
—
|
|
Bonds, unsecured
|
6.50%
|
2017
|
USD
|
345
|
334
|
309
|
|
Notes, unsecured(1)
|
5.625%
|
2014
|
EUR
|
541
|
544
|
543
|
|
Senior notes, unsecured(1)
|
5.875%
|
2014
|
USD
|
231
|
223
|
206
|
|
Bonds, unsecured(2)
|
5.10%
|
2013
|
EUR
|
80
|
80
|
80
|
|
Notes, unsecured
|
8.125%
|
2011
|
USD
|
—
|
38
|
35
|
|
Bonds, unsecured(2)
|
3.895%
|
2010
|
EUR
|
—
|
—
|
40
|
|
Other debt
|
4.50% to 7%
|
2014 to 2031
|
USD
|
14
|
10
|
5
|
|
Mortgages payable
|
8.25%
|
2009 to 2016
|
USD
|
2
|
2
|
2
|
|
Senior notes
|
7.06%
|
2009 to 2016
|
USD
|
6
|
7
|
8
|
|
Other notes, unsecured
|
13.21%
|
2009 to 2013
|
USD
|
—
|
1
|
1
|
|
Floating term loan, unsecured
|
LIBOR 6m+45bps
|
2012
|
USD
|
87
|
84
|
78
|
|
Bank borrowings
|
|
|
EUR
|
|
|
|
|
Total non-subordinated borrowings
|
|
|
|
2 413
|
2 006
|
1 946
|
|
Less current portion
|
|
|
|
|
|
|
|
Total non-subordinated borrowings, non-current
|
|
|
|
2 325
|
1 966
|
1 904
|
____________________
(1) Notes are part of hedging relationship (see Note 19).
(2) Bonds issued by Delhaize Group’s Greek subsidiary Alfa Beta.
The interest rate on long-term debt (excluding finance leases, see Note 18.3) was on average 5.0%, 5.1% and 5.7% at December 31, 2011, 2010 and 2009, respectively. These interest rates were calculated considering the interest rate swaps discussed in Note 19.
Delhaize Group has a multi-currency treasury note program in Belgium. Under this treasury note program, Delhaize Group may issue both short-term notes (commercial paper) and medium-term notes in amounts up to EUR 500 million, or the equivalent thereof in other eligible currencies (collectively the “Treasury Program”). No notes were outstanding at December 31, 2011, 2010 and 2009.
Issuance of new Long-term Debts
During October 2011, Delhaize Group completed the public offering of a 7-year 4.25% retail bond in Belgium and in the Grand Duchy of Luxembourg for a total amount of EUR 400 million. The majority of the proceeds of the retail bond were used for the voluntarity early repayment of long-term and short-term debt assumed as part of the Delta Maxi acquisition.
The bonds contain a change of control provision allowing their holders to require Delhaize Group to repurchase their bonds in cash for an amount equal to 101% of the aggregate principal amount of the bonds plus accrued and unpaid interest thereon (if any), upon the occurrence of (i) the acquisition by an offeror of more than 50% of the ordinary shares or other voting rights of Delhaize Group or if a majority of the members of the board of directors of Delhaize Group no longer are so-called continuing directors and (ii) 60 days after the change in control described under (i), there is a downgrade of the rating of Delhaize Group by two rating agencies.
Refinancing of Long-term Debts
In October 2010, Delhaize Group exchanged USD 533 million of the 9.00% debentures due 2031 and USD 55 million of the 8.05% notes due 2027 (together the “Existing Securities”) issued in a private offering by the wholly-owned subsidiary Delhaize America, LLC, for USD 827 million, 5.70% senior notes due 2040 issued by Delhaize Group.
The transaction qualified as a “debt modification” under IFRS (see Note 2.3) and any costs or fees incurred adjusted the carrying amount of the Existing Securities, being the carrying amount of the new senior notes, and are amortized over the remaining term of the senior notes due 2040. In line with IFRS, the non-cash premium granted, being the difference between the principal amounts of the Existing Securities tendered and the principal amount of the new senior notes issued, had no immediate impact on the carrying amount of the new notes and is also amortized over the remaining term of the senior notes, i.e., until 2040.
Repayment of Long-term Debts
On April 15, 2011, the USD 50 million notes issued in 2001 by Delhaize Group’s U.S. subsidiary Delhaize America matured and were repaid.
Defeasance of Hannaford Senior Notes
In 2003, Hannaford invoked the defeasance provisions of several of its outstanding senior notes and placed sufficient funds in an escrow account to satisfy the remaining principal and interest payments due on these notes (see Note 11). As a result of this defeasance, Hannaford is no longer subject to the negative covenants contained in the agreements governing the notes.
As of December 31, 2011, 2010 and 2009, USD 8 million (EUR 6 million), USD 11 million (EUR 8 million) and USD 12 million (EUR 9 million) in aggregate principal amounts of the notes were outstanding, respectively. At December 31, 2011, 2010 and 2009, restricted securities of USD 12 million (EUR 9 million), USD 13 million (EUR 10 million), and USD 15 million (EUR 10 million), respectively, were recorded in investment in securities on the balance sheet (see Note 11).
Long-term Debt by Currency and Contractually Agreed Payments
The main currencies in which Delhaize Group’s long-term (excluding finance leases, see Note 18.3) debt are denominated are as follows:
|
|
|
|
|
|
|
|
|
U.S. dollar
|
1 391
|
1 381
|
1 281
|
|
Euro
|
|
|
|
|
Total
|
2 413
|
2 006
|
1 946
|
Fair Value of Long-term Debt
The fair value of the Group’s long-term debt (excluding finance leases, see Note 18.3) is based on the current market quotes for publicly traded debt (multiplying the quoted price with the nominal amount). Fair values of non-public debt are estimated using rates currently publicly available for debt of similar terms and remaining maturities offered to the Group and its subsidiaries.
|
|
|
|
|
|
|
|
Fair value of long-term debt
|
2 839
|
2 342
|
2 158
|
|
Carrying value of long-term debt:
|
|
|
|
|
Current
|
88
|
40
|
42
|
|
Non-current
|
2 325
|
1 966
|
1 904
|
|
Total
|
2 413
|
2 006
|
1 946
|
Collateralization
The portion of Delhaize Group’s long-term debt that was collateralized by mortgages and security charges granted or irrevocably promised on Delhaize Group’s assets was EUR 37 million at December 31, 2011 and EUR 17 million at December 31, 2010 and 2009.
At December 31, 2011, 2010 and 2009, EUR 56 million, EUR 38 million and EUR 32 million, respectively, of assets were pledged as collateral for mortgages.
Debt Covenants for Long-term Debt
Delhaize Group is subject to certain financial and non-financial covenants related to the long-term debt instruments indicated above. While these long-term debt instruments contain certain accelerated repayment terms, as further described below, none contain accelerated repayment clauses that are subject solely to changes in the Group’s credit rating (“rating event”). Further, none of the debt covenants restrict the abilities of subsidiaries of Delhaize Group to transfer funds to the parent.
Indentures covering the notes due in 2014 (USD and EUR), 2017 (USD), 2027 (USD) and 2040 (USD), the debentures due in 2031 (USD) and the retail bond due in 2018 (EUR) contain customary provisions related to events of default as well as restrictions in terms of negative pledge, liens, sale and leaseback, merger, transfer of assets and divestiture. The 2014 (USD and EUR), 2017 (USD) and 2040 (USD) notes and the 2018 (EUR) bonds also contain a provision granting their holders the right to early repayment for an amount not in excess of 101% of the outstanding principal amount thereof in the event of a change of control in combination with a rating event.
The term loan maturing in 2012 contains customary provisions related to events of default as well as a minimum fixed charge coverage ratio and a maximum leverage ratio, both based on non-GAAP measures.
The bonds due in 2013 contain customary defined non-GAAP measure based minimum fixed charge coverage and maximum leverage ratios.
At December 31, 2011, 2010 and 2009, Delhaize Group was in compliance with all covenants for long-term debt.