Food Lion 2006 Annual Report Download - page 80

Minority Interests
Minority interests represent third-party interests in the equity of fully consoli-
dated companies that are not wholly owned by Delhaize Group.
(in millions of EUR) December 31,
2006 2005 2004
Belgium 0.5 0.4 0.4
Greece 35.7 29.8 32.0
Total 36.2 30.2 32.4
16. Long-term Debt
Delhaize Group manages its debt and overall financing strategies using a com-
bination of short, medium and long-term debt and interest rate swaps. Delhaize
Group finances its daily working capital requirements, when necessary, through
the use of its various committed and uncommitted lines of credit. The short and
medium-term borrowing arrangements generally bear interest at the inter-bank
offering rate at the borrowing date plus a pre-set margin. Delhaize Group also
uses a treasury notes program.
Long-term debt (excluding finance leases) net of discounts/premiums, deferred
transaction cost and hedge accounting fair value adjustment consists of the
following:
(in millions of EUR) December 31,
2006 2005 2004
Notes, 8.125% (due 2011), unsecured 829.0 924.8 802.6
Debentures, 9.00% (due 2031), unsecured 642.2 716.6 620.4
Notes, 7.375% (due 2006), unsecured - 477.5 416.1
Convertible bonds, 2.75% (due 2009), unsecured 283.2 276.6 270.3
Bonds, 5.50% (due 2006), unsecured - 150.0 149.9
Bonds, 4.625% (due 2009), unsecured 149.4 149.1 148.8
Notes, 7.55% (due 2007), unsecured 110.0 122.6 106.0
Notes, 8.05% (due 2027), unsecured 91.8 102.2 88.4
Bonds, 8.00% (due 2008), unsecured 98.8 100.3 101.0
Medium-term notes 3.354% to 4.70% (due 2007), unsecured 50.0 50.0 -
Other notes, 6.31% to 14.15% (due 2007 to 2016) 31.4 49.1 50.5
Bonds, 3.895%, (due 2010), unsecured 40.0 40.0 -
Bank borrowings 10.4 14.9 1.8
Medium-term notes, 6.80% (due 2006), unsecured - 12.4 12.4
Other debt, 7.25% (due 2007 to 2018) 9.9 11.5 8.1
Mortgages payable, 7.55% to 8.65% (due 2008 to 2016) 5.3 7.1 7.3
Other - - 0.2
Total non-subordinated borrowings 2,351.4 3,204.7 2,783.8
Less current portion (181.6) (658.3) (10.8)
Total non-subordinated borrowings, long-term 2,169.8 2,546.4 2,773.0
The interest rate on long-term debt (excluding finance leases) is on average 7.3%,
7.2% and 7.0% at December 31, 2006, 2005 and 2004, respectively. This interest
rate was calculated considering the interest rate swaps discussed below.
In 2006, Delhaize Group redeemed the EUR 150 million 5.5% bonds and the
USD 563.5 million (EUR 477.5 million) 7.375% notes.
In February 2005, Delhaize Group’s subsidiary Alfa-Beta issued bonds having an
aggregate principal amount of EUR 40 million that mature in 2010 and bear interest
at 3.895%.
In April 2004, Delhaize Group issued convertible bonds having an aggregate
principal amount of EUR 300 million for net proceeds of EUR 295.2 million (the
“Convertible Bonds”). The Convertible Bonds mature in 2009 and bear interest
at 2.75%, payable in arrears on April 30 of each year. The Convertible Bonds are
convertible by holders into ordinary shares of the Company at any time on or after
June 10, 2004 and up to and including the date falling seven business days prior to
April 30, 2009, unless previously redeemed, converted or purchased and cancelled.
The conversion price is initially EUR 57.00 per share subject to adjustment on the
occurrence of certain events as set out in the Trust Deed. Conversion in full of the
aggregate principal amount of the Convertible Bonds at the initial conversion price
would result in the issuance of 5,263,158 ordinary shares. The net proceeds from
the issue of the Convertible Bonds were split between the liability component and
an equity component, representing the fair value of the embedded option to convert
the liability into equity of the Group. The interest charged for the year is calculated
by applying an effective interest rate of 5.4% to the liability component.
In 2004, Delhaize Group repurchased USD 36.5 million (EUR 29.3 million) of Delhaize
America’s USD 600 million (EUR 455.6 million) 7.375% notes, USD 5.0 million
(EUR 4.0 million) of its USD 150 million (EUR 113.9 million) 7.55% debt securities,
and retired through early redemption USD 10.9 million (EUR 8.8 million) of mortgage
payables and other debt, resulting in a loss of USD 4.5 million (EUR 3.6 million)
recorded in finance costs in the income statement.
The Group maintains interest rate swaps against debt obligations in the U.S.,
effectively converting a portion of the debt from fixed to variable rates. The notional
principal amounts of interest rate swap arrangements as of December 31, 2006
were USD 100 million maturing in 2011. These swaps qualify for hedge accounting
treatment and therefore the carrying amount of the underlying debt instruments is
adjusted to reflect changes in the fair value of the hedged risk.
In 2003, Hannaford invoked the defeasance provisions of its outstanding 7.41%
Senior Notes due February 15, 2009, 8.54% Senior Notes due November 15, 2004,
6.50% Senior Notes due May 15, 2008, 6.58% Senior Notes due February 15,
2011, 7.06% Senior Notes due May 15, 2016 and 6.31% Senior Notes due May 15,
2008 (collectively, the “Notes”) and placed sufficient funds in an escrow account
to satisfy the remaining principal and interest payments due on the Notes. As a
result of this defeasance, Hannaford is no longer subject to the negative covenants
contained in the agreements governing these notes. As of December 31, 2006, 2005
and 2004, USD 41.6 million (EUR 31.6 million), USD 53.4 million (EUR 45.3 million)
 / ANNUAL REPORT 2006
78