Stop & Shop Reaches Tentative Withdrawal Agreement with Local Unions on UFCW International Union - Industry Pension Fund
21 Juli 2020 - 11:00PM
Stop & Shop Reaches Tentative Withdrawal Agreement with Local
Unions on UFCW International Union - Industry Pension Fund
Zaandam, the Netherlands, July 21, 2020 – Ahold
Delhaize announces today that its U.S. brand Stop &
Shop, reached
a tentative agreement to terminate its
participation in the United Food & Commercial Workers
International Union (UFCW) – Industry Pension
Fund (the “National Plan”), through a transaction that
the National Plan’s trustees determined to be in the best
interests of the National Plan’s participants and
beneficiaries. While the plan is not in
critical status, the tentative agreement does
importantly improve the security
of pension benefits for associates as well
as reduces financial risk for the company. If
ratified by the UFCW Locals, the transaction will be treated
as an extraordinary item and will therefore not
impact the underlying operating results outlook for
2020. This statement should not be interpreted as an
update to any component of the previously
issued 2020 outlook. As is customary, the 2020 outlook
will be updated on August 5th, when the company
reports Q2 2020 results.
Pending ratification of this agreement, Stop & Shop expects
to pay the National Plan withdrawal liability of
$649 million (€567 million), on a pre-tax basis, to
fulfill Stop & Shop’s obligations for past service for
associates and retirees in the National Plan. Stop & Shop
will also make
an $18 million (€16 million) contribution
to a transition reserve for a new variable annuity
pension plan, described in further detail below. On an after-tax
basis, the withdrawal liability and contribution to the transition
reserve total approximately $500 million
(€437 million). The withdrawal liability
will be satisfied by installment payments to the
National Plan over the next three years. Ahold Delhaize
will therefore recognize a provision in these amounts, which
will impact Q3 IFRS results. The provision will be excluded from
both underlying operating profit and underlying earnings per
share. While the majority of this obligation will be
paid in 2020, the Group’s full year 2020 free cash flow
outlook, which is expected to be in excess of
€1.5 billion, will not be impacted due to the
strong level of free cash flow generated in Q1.
Kroger and Albertsons have also entered into
separate tentative agreements with the
UFCW Locals and the National Plan Trustees to
withdraw from the National Plan. Together, Ahold Delhaize’s
brand Stop & Shop, Kroger, and the UFCW Locals plan
to create the UFCW International Union-Industry Variable
Annuity Pension Plan for future benefits. This new plan is designed
to protect the benefit accrual of participants, with
a significantly reduced risk of
plan underfunding and improved visibility on
annual contributions. The annual contribution by Stop
& Shop to fund the new variable annuity plan
is expected to be nearly identical to the annual
contributions previously estimated for the National
Plan during the next eight years. Therefore, this change
also has no impact to the previously
issued financial outlook.
These tentative agreements have been approved by
Stop & Shop, the National Plan board of trustees and
the UFCW local
unions. They remain contingent upon approval
and ratification by Stop & Shop and
Kroger associates in 25 local UFCW unions,
which is expected to occur by October 1, 2020.
Together, these agreements are expected to
materially improve the security of pension benefits for
associates and reduce financial risk for the
company.
Cautionary notice
This communication contains information that qualifies as inside
information within the meaning of Article 7(1) of the EU Market
Abuse Regulation.
This communication includes forward-looking statements. All
statements other than statements of historical facts may be
forward-looking statements. Words such as tentative, plan, will be,
impact, outlook, update, updated, expects, would be, the next three
years, will not be, future, risk, during the next eight years,
expected, remain, contingent or other similar words or expressions
are typically used to identify forward-looking
statements.
Forward-looking statements are subject to risks, uncertainties
and other factors that are difficult to predict and that may cause
actual results of Koninklijke Ahold Delhaize N.V. (the
“Company”) to differ materially from future results expressed or
implied by such forward-looking statements. Such
factors include, but are not limited to the risk factors
set forth in the Company’s public filings and other disclosures.
Forward-looking statements reflect the current views of the
Company’s management and assumptions based on information currently
available to the Company’s management. Forward-looking statements
speak only as of the date they are made and the Company
does not assume any obligation to update such statements, except as
required by law.
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