SR Accord: Related-Party Credit as a Separate Risk Lens
Direct exposure to Adi Zim declined in 2025, but year-end related-party credit still sat at roughly ILS 120 million across three channels. This is not just a governance footnote, because the company's own bank funding agreements treat owner-linked paper as a separate risk layer.
What This Follow-up Is Isolating
The main article argued that SR Accord's 2025 test shifted to collateral quality, collections, and funding structure. This follow-up isolates one layer that is too easy to leave in a footnote: credit tied to the controlling shareholder.
This is not a story about the owner financing the company. It is almost the opposite. In 2025 the company did not take credit from Tzim Holdings, and because the banks had already released Tzim Holdings and Adi Zim from their guarantees, no guarantee fees were paid during the year either. Even so, year-end disclosures still showed three owner-linked exposure channels: ILS 77.5 million in credit transactions with the controlling shareholder, ILS 34.4 million of credit to Nasa Ono, and ILS 8.1 million under framework deals with third parties whose checks were drawn on the controlling shareholder or companies he controls.
The key point is not just the size. It is the direction of travel. Direct exposure to the controlling shareholder fell from ILS 110.0 million to ILS 77.5 million, but total exposure across the three channels fell by only 6.4%, to ILS 120.1 million. The risk did not disappear. It changed shape.
This is not only a governance issue either. In the company's bank funding structure, several agreements exclude checks drawn on the controlling shareholder's accounts or on related companies from the pledged-check pool, and another bank bars the company from depositing checks drawn by entities controlled by Adi Zim. The lenders themselves are marking this paper as a separate risk layer.
That is the core read. A reader who focuses only on the drop in direct owner credit could conclude that this layer is meaningfully shrinking. In practice, part of the exposure migrated into a project-finance wrapper through Nasa Ono, and part moved into the smaller but faster-growing owner-linked check channel. The net decline was modest.
What Actually Sits Inside The ILS 120 Million
These are not the same transaction repeated three times. They represent three different risk profiles:
| Channel | 2025 year-end balance | 2024 year-end balance | 2025 P&L contribution | What defines it |
|---|---|---|---|---|
| Direct credit to the controlling shareholder | ILS 77.5 million | ILS 110.0 million | ILS 11.0 million | Discounting checks of the controlling shareholder or companies he controls, for up to 3 months, subject to collateral and size limits |
| Credit to Nasa Ono | ILS 34.4 million | ILS 17.7 million | ILS 3.2 million | Structured real-estate project finance, with an insurer, separate equity-completion and project-accompaniment lines, and milestones |
| Third parties using checks drawn on the controlling shareholder or his companies | ILS 8.1 million | ILS 0.6 million | ILS 1.2 million | The customer is a third party, but the paper itself is drawn on the controlling shareholder or companies he controls |
That table changes the reading. The biggest bucket is still the direct-credit channel, and it still accounts for roughly 64.6% of total owner-linked exposure. But the new story is the mix shift: Nasa Ono almost doubled, and the small operational check channel moved from immaterial to visible.
Taken together, the three channels equaled roughly 6.7% of the group's net customer credit book at year-end and about 24.6% of total equity. That is not the whole company, but it is also far too large to treat as accounting noise.
Channel 1: Direct Credit Is Smaller, But Still The Core Exposure
The direct channel to the controlling shareholder remains the heaviest part of this layer. Under the framework approved in 2021 and extended in November 2024 for another three years without changing its terms, the controlling shareholder may, directly or through companies he controls, discount checks with maturities of up to 3 months. The total volume under this channel, together with the parallel related-check framework, is capped as a share of the company's customer portfolio.
The decline from ILS 110.0 million to ILS 77.5 million is real and meaningful. This is not cosmetic. Even after that decline, however, the balance still equals almost 16% of the group's total equity. So the right conclusion is not that the issue is resolved. It is that direct exposure is smaller, but still material enough to require its own lens.
The collateral structure matters too. The framework says the controlling shareholder must provide the security required for the company to extend this credit, on terms similar to or better for the company than those in the other related-party channels. That reduces part of the risk, but it does not remove it. Once the company is lending directly into the controlling shareholder's sphere, collateral value and collection quality remain central.
Channel 2: The Smallest Bucket Is Also The Easiest To Miss
At first glance, the third-party check channel looks small. That is exactly why it can be misread. Legally, the customer is a third party. Economically, the paper itself is drawn on the controlling shareholder, his relative, or companies he controls, or alternatively delivered by third parties tied to the controlling shareholder.
The company distinguishes here between two deal types. In one, pricing is the company's minimum rate plus 0% to 2%, and the controlling shareholder must provide security or a personal guarantee plus an offset undertaking. In the other, pricing is the minimum rate plus 0% to 4%, with collateral provided by the customer in line with comparable transactions. In other words, the company is at least trying to price this paper by risk tier.
But the number that matters is the change. The year-end balance rose from only ILS 611 thousand to ILS 8.1 million. That is still small relative to the total book, but it shows that owner-linked paper has not disappeared from the operating flow. It has simply moved into a channel that is easier to label as third-party business even though the owner relationship still sits at the center of the structure.
Channel 3: Nasa Ono Is No Longer A Footnote
This is the most interesting bucket because it sits right at the boundary between governance risk and underwriting risk. Arno A.B., together with a leading insurance company, extended financing to Nasa Ono for a Tama 38 project in Kiryat Ono. Nasa Ono is a special-purpose company for the project, controlled 90% by Haggag Zim Real Estate, and as of the report date 59.5% of Haggag Zim Real Estate was held by Tzim Holdings.
The first approved facility totaled up to ILS 23 million. In May 2025 the project-accompaniment line was enlarged by another ILS 15 million, taking the total facility to ILS 38 million: up to ILS 8 million for equity completion and up to ILS 30 million for project finance. By year-end 2025, roughly ILS 34.4 million had already been drawn. This is no longer an experimental side exposure. It is a nearly full facility.
It is important to be precise here. This is not the same risk quality as direct owner credit. It is project finance, with an insurer, collateral, acceleration triggers, and milestones tied to apartment sales and cash collections. But the fact that it nearly doubled within a year means the related-party layer did not really retreat. It moved into a more structured wrapper, with greater dependence on real-estate execution.
That is exactly why Nasa Ono deserves a separate read. If the project progresses as planned, this can look like a well-priced, well-framed transaction inside a governed structure. If sales velocity or collections drift, the issue stops being only governance and becomes a direct test of underwriting quality inside the controlling shareholder's orbit.
Where This Meets The Banks
This is where the discussion gets sharper. Several of the company's bank agreements say that checks drawn on the controlling shareholder's accounts or on related companies do not count toward the pledged-check pool. In another bank agreement the wording is different, but the direction is similar: the company may not deposit checks drawn by entities controlled by Adi Zim. This is not a drafting quirk. It is a disclosure that the providers of the company's funding do not treat owner-linked paper like ordinary paper.
Beyond that, several agreements also restrict the extension of credit to owners, assistance in obtaining credit, and various payments to owners without prior bank consent, unless no default event has occurred and the company remains in compliance with its financial covenants. In other words, the banks do not view the controlling shareholder only as a related party in a corporate-governance schedule. They also view him as a variable that can affect collateral quality and funding flexibility.
That does not make every shekel of related-party credit bad credit. It does mean the market should not assess this exposure only by asking whether it was properly approved. It also has to ask whether outside lenders count it like normal receivables. From the agreements themselves, the answer is clearly no.
The Counter-Thesis, And Why It Still Matters
A tougher reading also needs limits. The disclosures do not show a runaway transaction set or a framework that obviously slipped control. Quite the opposite. The agreements were approved, extended, include pricing, collateral, guarantees, offset letters, and in some cases acceleration triggers and milestones. The company also says these transactions are on market terms unless stated otherwise.
So the intelligent counter-thesis is that this is not a breakdown, but a controlled use of the company's underwriting capacity around a related party, within approved frameworks and with a sufficient protection layer. Nasa Ono in particular can be read more as structured project finance than as a disguised owner loan.
But even that counter-thesis leaves one test unresolved: is the total owner-linked exposure actually shrinking over time, or merely moving from one wrapper to another. 2025 gives only a partial answer. Direct owner credit is down, but total exposure remains material, and the project bucket has taken a larger share.
Conclusion
The right read of 2025 is not "credit to the controlling shareholder is down, so the risk is solved." The right read is that direct exposure did fall, but the broader related-party credit layer remained large, became more diversified, and is treated conservatively even by the lenders financing the company.
That matters because the combination of governance and credit changes how the book should be read. ILS 120.1 million of related-party exposure is not a side number, especially in a company whose growth is funded largely by short-term banks and whose core thesis already depends on collateral quality.
Over the next 2 to 4 quarters, three checkpoints will decide whether this risk is genuinely fading:
- Whether the combined balance across the three channels declines in absolute terms, not only in composition.
- Whether Nasa Ono starts repaying in practice, rather than staying close to fully drawn.
- Whether the bank funding architecture stays neutral toward this exposure, or tightens further in how owner-linked paper is counted for collateral.
If all three move the right way, 2025 can start to look like a genuine de-risking year for the owner-linked layer. If not, the headline decline will turn out to have been mainly a shift from direct risk into more indirect forms.
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