Food Lion 2013 Annual Report Download - page 52

On October 6, 2010, the Company announced the issuance of new $827
million 5.70% Notes due 2040 (the “New Notes”) pursuant to a private
offer to exchange 9.00% Debentures due 2031 and 8.05% Notes due
2027 issued by its wholly-owned subsidiary Delhaize America, LLC held
by eligible holders. The New Notes contain a change of control provi-
sion 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 over the Company and downgrading by
Moody’s and S&P.
On October 5, 2011 the Company announced the successful completion
on October 4, 2011 of its public offering of €400 million 7 year 4.25%
retail bonds in Belgium and in the Grand Duchy of Luxembourg listed on
NYSE Euronext Brussels pursuant to a prospectus filed by the Company
with the Financial Services and Markets Authority of Belgium (FSMA).
The bonds contain a change of control 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
over the Company and downgrading by Moody’s and S&P.
On April 10, 2012 the Company issued $300 million 4.125% senior notes
due 2019 to qualified investors pursuant to a registration statement
filed by the Company with the SEC. The notes contain a change of
control 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 over the Company and
downgrading by Moody’s and S&P.
On November 27, 2012 the Company issued €400 million 3.125% senior
notes due 2020 listed on NYSE Euronext Brussels to qualified investors
pursuant to a prospectus filed by the Company with the FSMA. The
notes contain a change of control 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
over the Company and downgrading by Moody’s and S&P.
The Ordinary Shareholders’ Meeting held on May 26, 2011 approved a
change in control clause set out in the €600 million five-year revolving
credit facility dated April 15, 2011 entered into among inter alias the
Company, Delhaize America, LLC, Delhaize Griffin SA, Delhaize The Lion
Coordination Center SA, as Borrowers and Guarantors, the subsidiary
guarantors party thereto, the lenders party thereto, and Fortis Bank SA/
NV, Bank of America Securities Limited, JP Morgan PLC and Deutsche
Bank AG, London Branch, as Bookrunning Mandated Lead Arrangers.
The “Change in Control” clause provides that, in case any person (or
persons acting in concert) gains control over the Company or becomes
the owner of more than 50 per cent of the issued share capital of the
Company, this will lead to a mandatory prepayment and cancellation
under the credit facility.
Risk Management and Internal Controls
Overview
The Company’s Board of Directors has ultimate responsibility for mon-
itoring the performance of the Company and its internal controls. It is
assisted by Board committees, described herein, which monitor various
aspects of the Company’s performance and make recommendations to
the Board for decisions and approval.
The Board of Directors relies on management for establishing and
maintaining adequate internal controls. Internal control is broadly
defined as a process implemented by the Board and management,
designed to provide reasonable assurance regarding achievement of
objectives related to:
• effectiveness and efficiency of operations,
• reliability of financial reporting, and
• compliance with applicable laws and regulations.
The Audit Committee ultimately oversees major business and financial
risk management and discusses the process by which management of
the Company assesses and manages the Company’s exposure to those
risks and the steps taken to monitor and control such exposures.
Management of the Company has established and operates its internal
control and risk management systems in a manner that is consistent
with guidelines issued by the Committee of Sponsoring Organizations
of the Treadway Commission (“COSO”). The internal control system is
based upon COSO’s Internal Control – Integrated Framework, and its
risk management system is based on COSO’s Enterprise Risk Manage-
ment Framework.
Financial Reporting
The Company’s internal controls over financial reporting are a subset of
internal controls and include those policies and procedures that:
• pertain to the maintenance of records that, in reasonable detail, accu-
rately and fairly reflect the transactions and dispositions of the assets
of the Company;
• provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with IFRS as adopted by the EU, and that receipts and expenditures of
the Company are being made only in accordance with authorizations
of management and directors of the Company; and
• provide reasonable assurance regarding prevention or timely detec-
tion of unauthorized acquisition, use or disposition of the Company’s
assets that could have a material effect on the financial statements.
Since the Company has securities registered with the SEC, the Com-
pany must provide (i) a management report on the effectiveness of the
Company’s internal control over financial reporting, and (ii) the Statutory
Auditor’s assessment of the effectiveness of internal control over finan-
cial reporting, as described in Section 404 of the U.S. Sarbanes-Oxley
Act of 2002 and the rules implementing such act. The Statutory Auditor’s
50 DELHAIZE GROUP ANNUAL REPORT 2013 CORPORATE GOVERNANCE