VEB settles with Ahold .

Ahold reaches agreements in reference to the US class action and the legal issues in relation to the Vereniging van Effectenbezitters (Dutch Investors’ Association)

Ahold and the VEB are announcing this morning they have reached a settlement. This concerns the two proceedings that the VEB had launched against Ahold – also on behalf of Dutch and European investors – against Ahold (the inquiry and the annual accounts procedure) as well as the civil claims proceedings that had been announced. At the same time Ahold has reached a settlement with the lawyers in the US class action proceedings.

The most important element in these settlements is that Ahold – in exchange for the termination of these proceedings - will pay the sum of USD 1.1 billion into a Settlement Fund. This amount will – after deducting costs and administrative expenses – will find its way to those investors qualifying under the preconditions. It is expected that compensation per share will be in the USD 1.00 – USD 1.30 range. For reasons of convenience it has been decided that these arrangements will be effected using the class action arrangements.


The key points of the settlement are the following:


  1. All claims against Ahold in the context of the Class Action proceedings are settled. The settlement covers all the original defendants, including U.S. Foodservice, the individual plaintiffs (previous Supervisory and Executive Board members) and the underwriters. Only such claims as might be made against Deloitte, the auditors, do not form part of this settlement.
  2. It is agreed that Ahold will pay a sum of USD 1.1 billion into a Settlement Fund.
  3. After deducting an amount for the class action attorneys and fees this sum will be distributed amongst (former) Ahold shareholders qualifying for compensation.
  4. Shareholders who purchased Ahold shares in the period commencing 30 July 1999 up to and including 23 February 2003 may qualify for compensation.
  5. Shareholders who purchased shares in the rights issue of September 2001 (80 million shares) will receive a slightly higher level of compensation (up to 30% more).
  6. No distinction will be made between US shareholders and other shareholders. Shareholders finding themselves in the same situation will receive equal compensation.
  7. According to preliminary calculations the compensation will amount to between USD 1.00 and USD 1.30 per qualifying share.
  8. Payment of the sum into the Settlement Fund will take place in two instalments: USD 733 million after the following preliminary approval of the settlement by the District Court of Maryland (which is expected in January 2006) and USD 367 million within 6 months subsequent to the granting of definitive approval from the District Court of Maryland.
  9. If (former) holders of more than 180 million shares choose to opt out of the settlement (i.e. do not wish to be bound by the settlement), then Ahold will have the right to terminate the agreement.
  10. Ahold will recognize a charge (after tax) in the amount of EUR 585 million in the third quarter of 2005.

The following additional matters have been agreed with the VEB:

  1. The VEB will terminate the annual accounts procedure shortly.
  2. The enquiry procedure will be pursued up to and including the submission of the investigators’ report to the Enterprise Chamber.
  3. After that no subsequent steps will be taken: the VEB shall not submit a petition request that a determination be made in respect of gross mismanagement nor in respect of requesting further (provisional) relief measures.
  4. The VEB will not proceed to launch any proceedings (for damages) against persons or parties involved in the settlement.
  5. Ahold shall pay the VEB the amount of EUR 2.5 million in stages to cover the costs the VEB has, and will, incurred.
  6. Out of a separate Settlement Fund the amount of USD 8.82 million (EUR 7.5 million) will be paid to an entity designated by the VEB (a foundation).
  7. The VEB shall issue a positive advice to shareholders in respect of the settlement reached.
  8. Ahold shall endeavour to attain the best possible financial result for the company in the legal and/or arbitration proceedings against previous Executive Board members and executives.


Balanced solution
The VEB is satisfied with the settlement that has been reached as this provides for substantial compensation for those who suffered damage as a consequence of mismanagement at Ahold. The settlement can only be a compromise – the total loss on the stock suffered by all Ahold shareholders remains far higher than the value of the settlement, but further litigation would have brought with it substantial uncertainties in terms of the level of possible compensation and the time at which this would come into the hands of the shareholders concerned. From Ahold’s perspective the value of the settlement is such that the company can bear the charge whilst the execution of its strategy is not imperilled.


No distinction between US and international investors
For administrative reasons it has been decided to let the process – that of compensating investors – be effected via the US class action. It is of extreme importance that no difference be made between US and non-US investors. This was a major difficulty for the VEB in other, previous proceedings.

In terms of the geographical distribution of shareholdings in Ahold there is only very general data available. It is estimated that in February 2003 about 30% of the shares were in the hands of Dutch shareholders, followed by the US (21%), the UK and Eire (14 %) and the rest of Europe (17 %). Over 9000 shareholders had registered for the VEB’s action. The VEB also published advertisements in English and German in 9 countries of Europe, including Germany, the United Kingdom, Sweden, Denmark and Italy.


Payment and timing
Although the precise payment is not yet clear – the Plan of Allocation has still to be submitted and the Court has still to grant approval – it is possible to specify a range within which the compensation will fall: between USD 1.00 and USD 1.30 for each share purchased during the specified period and which was still held on 23 February 2003.

The timing plan * is expected to be the following:


- December 2005: submit Plan of Allocation to the Maryland District Court

  • January 2006: provisional approval by the Maryland District Court 
  • Feb-Apr 2006 opt out possibility
  • Apr/May 2006: definitive approval
  • June 2006- Jan/Feb 2007: register Class Action participants
  • Quarter 1 2007: commence payment


Completion of VEB proceedings
The VEB has agreed to terminate the various legal (and intended) proceedings, with the exception of the enquiry procedure and possible proceedings that may be taken against Deloitte. The first stage of the enquiry procedure will be taken to completion, meaning that the VEB and the investment community will have access to the investigators’ report. The VEB has always emphasised that the VEB – in addition to compensation for investors – wished to gain proper understanding of the events that actually happened during the 1998 – 2003 period. This objective will thus be achieved.


Van der Hoeven, Meurs and Miller
When stating its intention to commence an action in damages the VEB further noted it wished to proceed against other parties and/or person who bore (a share in the) responsibility for the two most significant problems: the fraud at U. S. Foodservice and the improper consolidation. This concerns, amongst others, former Executive Board members Van der Hoeven (CEO), Meurs (CFO) and Miller (U.S. Foodservice). In the settlement it has also been agreed that VEB will waive any claims in respect of (former) Executive Board members, executives and Supervisory Board members. In the settlement it has also been agreed that Ahold shall endeavour – in the context of these legal and/or arbitration procedures – to achieve the best possible result for the company. The VEB has also stipulated that Ahold shall each year – in its Annual Report – provide information about the course of events in respect of these proceedings and arbitration procedures. At the same time any possible results or settlements in this matter will be disclosed immediately.


Compensation to VEB and the entity
Within this settlement the VEB receives an amount of EUR 2.5 million for the costs it has incurred in the context of the Ahold proceedings. These cover charges such as attorneys’ fees, external advice, managing registration and infrastructure (programming and on-line registration). The amount further includes a sum covering the legal charges the VEB will still incur so as to complete the (legal) arrangements pertaining to this settlement.


At the same time the amount of USD 8.82 million (EUR 7.5 million) will be paid from the Settlement Fund to an entity to be designated by the VEB (which is likely to be a foundation)in order to facilitate and to provide assistance for a world-wide settlement. This concerns an entity that the VEB can call upon in the appropriate circumstances with a request for (financial) assistance in the context of its endeavours to stand up for investors and/or so as to launch proceedings for the benefit of investors.

Recommendation to shareholders concerned
The VEB views the settlement as positive and recommends (former) Ahold shareholders – in so far as they qualify – to make use of the settlement. The VEB shall also play a role in the legal process by bringing the settlement to the attention of (previous) Ahold shareholders and assisting in registration. In that context our website www.aholdvergoeding.nl is on-line as from today.

Vereniging van Effectenbezitters

* provisional estimate: assuming no appeals will be launched in the US

This is a translation of the Dutch press release. The Dutch version is leading.