Ahold makes moves to repair balance sheet
Nov 7, 2003 12:00 PM, from staff and wire reportsRoyal Ahold, the Netherlands-based global food retailer, plans to issue new shares, sell some operations, reduce capital spending, and suspend its common share dividend in an attempt to repair its balance sheet in the wake of its accounting scandal.
The world's third-biggest retailer, Ahold operates the Giant and Stop & Shop supermarkets in the United States. It said it will issue 2.5 billion euros ($2.86 billion) in new shares to trim debt of around 12 billion euros ($13.7 billion).
During the next two years, Ahold will raise another 2.5 billion euros ($2.86 billion) by selling stores in Spain and will pare capital spending by 800 million euros ($914.8 million). It plans to suspend dividends to ordinary shareholders.
In February, Ahold admitted overstating earnings by more than 1 billion euros in 2000Ð2002, largely because of inflated sales at its US Foodservice subsidiary.
US and Dutch regulators began investigations into the firm's accounting practices, and in October, Ahold posted audited results for 2002Ñseven months late. It recorded a loss of 4.33 billion euros ($5.01 billion) for 2002 under US accounting rules.