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Published on 6/16/2004 in the Prospect News Bank Loan Daily, Prospect News Convertibles Daily and Prospect News High Yield Daily.

Fitch: Ahold faces challenges

Fitch Ratings said Koninklijke Ahold NV faces significant challenges to its stated goal of regaining an investment-grade credit rating by fiscal year 2005.

Fitch currently assigns Ahold a senior unsecured rating of BB- and a short-term rating of B.

The outlook is stable.

Fitch said this suggests the company is unlikely to reach investment grade within the next 18 to 24 months.

Ahold's new senior management has announced a series of measures under its Road to Recovery plan since the announcement in February 2003 of irregularities at the U.S. Foodservice division and the subsequent ratings downgrade.

Fitch said the company also needs to demonstrate a solid operational turnaround, which is the greatest challenge, given its self-imposed timescale.

Of the recovery measures announced, only the rights issue has been successfully completed to date.

Ahold's historically decentralized organization will act as a hindrance to the implementation of the operational changes in the arenas earmarked for improved efficiency.


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