Food Lion 2012 Annual Report Download - page 120

118 // DELHAIZE GROUP FINANCIAL STATEMENTS’12
Simultaneously, Delhaize Group entered into (i) matching interest rate swaps to hedge the Group’s exposure to changes in the
fair value of the 4.125% notes due, and (ii) cross-currency swaps, exchanging the principal amount ($300 million for €225 million)
and interest payments (both variable), to cover the foreign currency exposure (economic hedge). See Note 19 for additional
information on the hedge accounting applied.
During November 2012, Delhaize Group issued €400 million senior fixed rate bonds due 2020, at an annual coupon of 3.125%,
issued at 99.709% of their principal amount. Delhaize Group entered into matching interest rate swaps to hedge €100 million of
the Group’s exposure to changes in the fair value of the 3.125% bonds due to variability in market interest rates (see Note 19).
The net proceeds of the issuance were primarily used to fund the following tender offers:
 During December 2012, Delhaize Group completed a second tender offer for cash and purchased an aggregate nominal
amount of €94 million of the above mentioned €500 million notes at a price of 107.740%. Following the completion of both
offers, an aggregate nominal amount of €215 million of the notes remained outstanding.
 Simultaneously, the Group also completed an offer for cash for any and all of its outstanding $300 million 5.875% senior
notes due 2014 and purchased $201 million of the tendered notes at a purchase price of 105.945%. Following the
completion of the tender, an aggregate nominal amount of $99 million of the notes remained outstanding. Delhaize Group
exercised its right to redeem these remaining outstanding notes, which was completed on January 3, 2013.
These refinancing transactions did not qualify as a debt modification and resulted in the derecognition of existing notes and
recognition of new notes (see also Note 29.1).
Both the €400 and $300 million notes issued in 2012 contain a change of control provision allowing their holders to require
Delhaize Group to repurchase the notes in cash for an amount equal to 101% of their aggregated principal amount plus accrued
and unpaid interest thereon, if any, upon the occurrence of both (i) a change in control and (ii) a downgrade of the rating of the
notes by the rating agencies Moody’s and Standard & Poors within 60 days of Delhaize Group´s public announcement of the
occurrence of the change of control.
In October 2010, Delhaize Group exchanged $533 million of the 9.00% debentures due 2031 and $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 $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.
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 €400 million. The majority of the proceeds of the retail bond were used for the
voluntarily 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.
Repayment of Long-term Debts
On June 27, 2012, the $113 million floating term loan issued by the Group matured and was repaid.
On April 15, 2011, the $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, 2012 and 2011, $8 million (€6 million) and in 2010 $11 million (€8 million) in aggregate principal amounts of
the notes were outstanding. At December 31, 2012, 2011 and 2010, restricted securities of $11 million (€8 million), $12 million