Royal Ahold Case 02/25/2003

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Company Name(s): 
Royal Ahold
Case Name: 
Royal Ahold Case 02/25/2003
Case Status: 
Lawsuit Filed
Case Status: 
Judgment Issued
Case Status: 
Settlement Proposed
Case Status: 
Settlement Approved
Case Status: 
Case Dismissed
Affected Securities
OTC: AHONY
Lawsuit Overview
Type of Lawsuit: 
Shareholder Class Action
Date Filed: 
02/25/2003
Class Period Begin: 
07/30/1999
Class Period End: 
02/23/2003
Court of Filing: 
United States District Court for the Southern District of New York
Date Settled: 
11/27/2005
Settlement Amount: 
$1,100,000,000
Deadline to Participate in Settlement: 
08/18/2006
Summary: 

According to a press release dated July 28, 2006, Ahold announced that Drs. W.C.M. Oud has voluntarily withdrawn with prejudice his appeal, as announced by Ahold on July 21, 2006, against the final order and judgment approving Ahold's agreement with the lead plaintiffs to settle the securities class action entitled "In re Royal Ahold N.V. Securities & ERISA Litigation." The final order and judgment approving the settlement are no longer subject to appeal.

In a press release dated July 21, 2006, Ahold and the Public Employees' Retirement Association of Colorado ("COPERA"), one of the lead plaintiffs in the securities class action entitled "In re Royal Ahold N.V. Securities & ERISA Litigation", today announced that Drs. W.C.M. Oud has filed a notice of appeal against the final order and judgment of Judge Blake of the United States District Court for the District of Maryland, located in Baltimore, approving Ahold's agreement with the lead plaintiffs to settle the securities class action. Mr. Oud's objection was rejected previously by Judge Blake, and Ahold and COPERA believe the appeal has no merit and intend to oppose it.

In a press release dated June 17, 2006, Ahold announced that the United States District Court for the District of Maryland, located in Baltimore, Maryland, has entered a final order and judgment approving Ahold's agreement with the lead plaintiffs to settle the securities class action entitled "In re Royal Ahold N.V. Securities & ERISA Litigation." Under the terms of the agreement in the securities class action, the lead plaintiffs in the securities class action agree to settle all claims against Ahold in the securities class action for the sum of USD 1.1 billion (EUR 937 million). The settlement covers Ahold, its subsidiaries and affiliates, the individual defendants and the underwriters.

In a press release dated January 9, 2006, Dutch food retailer Ahold said Monday that a U.S. court has given the company preliminary approval to settle a securities class action lawsuit for $1.1 billion. Ahold has previously announced the terms of the settlement, under which it will pay between $1 and $1.30 a share to shareholders who purchased stock between July 30, 1999 and February 23, 2003. The lawsuit stems from Ahold's overstatement of three years of earnings.

In a press release dated November 27, 2005, Koninklijke Ahold N.V. announced today that it has reached an agreement with the lead plaintiffs to settle the securities class action entitled "In re Royal Ahold N.V. Securities & ERISA Litigation", which is pending before the United States District Court for the District of Maryland, located in Baltimore, Maryland. Ahold also today announced that it has reached an agreement to settle litigation with the Vereniging van Effectenbezitters (VEB) (Dutch Shareholders' Association).

Under the terms of the agreement in the securities class action, the lead plaintiffs in the securities class action agree to settle all claims against Ahold in the securities class action for the sum of USD 1.1 billion (EUR 945 million). The settlement covers Ahold, its subsidiaries and affiliates, the individual defendants and the underwriters.

The settlement is worldwide and applies to all qualifying common shares of Ahold. The term "qualifying shares" refers to all those common shares which were purchased between July 30, 1999 and February 23, 2003. According to preliminary calculations made by Ahold, the settlement amount, after deduction of plaintiffs' attorneys' fees, compensation in the amount of USD 9 million (EUR 7.5 million) to (an entity designated by) the VEB for facilitating the global settlement and administrative expenses, would yield a pre-tax amount of approximately USD 1.00 to 1.30 per qualifying share (EUR 0.90 to 1.15). US and non-US holders of qualifying shares will be treated equally under the agreement.

Ahold will contribute to the settlement fund, from which the qualifying shares will be paid, in two instalments: two thirds of the settlement amount will be funded into escrow within three business days following preliminary court approval of the settlement by the District Court of the District of Maryland, which is expected as early as January 2006, and the remaining one third will be funded into escrow within six months following final court approval of the settlement.

The agreement will be subject to approval of the District Court of the District of Maryland.

If holders of more than 180 million shares 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 and recover the funds paid, other than those amounts spent on notice of the settlement.

Under the terms of the agreement between the VEB and Ahold, the VEB has agreed to terminate the proceedings before the Enterprise Chamber of the Amsterdam Court of Appeals with respect to the annual financial statements of the Company for the years 1998, 1999, 2000, 2001 and 2002. In consideration of the withdrawal of such proceedings and as compensation of costs incurred, Ahold shall pay the VEB an amount of EUR 2.5 million.

According to an article in The Daily Telegraph dated January 8, 2004, a group of Dutch shareholders is taking Ahold court over last year's accounting scandal, which led to a 970m black hole in its accounts. Dutch shareholder association VEB has subpoenaed Ahold to appear before the Amsterdam Court of Appeals, demanding the company's annual accounts from 1998 to 2002 be nullified and restated. The retailer is under investigation by the Dutch authorities, the US Justice Department and the Securities & Exchange Commission, while two class action suits brought by US investors are pending.

Following a June 18, 2003 transfer from the Judicial Panel on Multidistrict Litigation, the securities class actions against Ahold were consolidated before the Honorable Catherine C. Blake in the United States District Court for the District of Maryland on November 4, 2003. Judge Blake also appointed Colorado PERA and Generic Trading of Philadelphia LLC as Lead Plaintiffs to prosecute the litigation on behalf of all members of the class. Also at this time, Entwistle & Cappucci LLP was appointed as Lead Counsel. On February 17, 2002, Lead Plaintiffs filed their Consolidated Amended Securities Class Action Complaint. The Court largely denied the defendants' motions to dismiss the Complaint in December 2004.

The original complaint alleges that during the Class Period, defendants materially misrepresented Ahold's financial results and performance for each of the quarters of and full year of fiscal 2001, ended December 30, 2001, and each of the first three quarters of fiscal 2002, by improperly recognizing income in Ahold's US Foodservice operations. On February 24, 2003, prior to the opening of the financial markets, Ahold announced that it would restate its results because "significant accounting irregularities were discovered in the recognition of income including prepayment amounts related to U.S. Foodservice's promotional allowance programs." The Company stated that the restatements may exceed $500 million of previously recognized income. On February 24, 2003, following the announcement of the restatement, Ahold's American Depositary Shares fell 61% or $6.53 from their February 21, 2003 closing price.