Baladi: Who Really Has Access to the Cash After the Balance-Sheet Reset

This Is Not About Whether The Balance Sheet Improved, But Who Can Actually Reach The Cash

The main article already made the broader point: 2025 was a real balance-sheet reset. Short-term bank debt fell to just NIS 3.5 million from NIS 272.8 million a year earlier, cash rose to NIS 72.4 million from only NIS 1.8 million, and working capital expanded to roughly NIS 534 million. That part is real.

This follow-up is isolating a narrower question. When a reader sees NIS 687.5 million of current assets, NIS 100.8 million of other receivables, and a large positive working-capital number, it is tempting to read that as broad liquidity. That is only partly true. Some of the reported comfort sits on a related-party loan that is classified as current, while controller dividends that were approved but not actually paid remain inside the company.

So this is not an immediate-survival story. It is a cash-access story. What is already inside the company as deployable cash, what is still contingent on collection from a related party, and what looks strong on the face of the balance sheet but is still tied to an internal financing loop between the company, the controller, and Baladi Holdings.

The negative bar is a liability, not immediate cash outflow. That is the point: the economic relationship with the controller and his group did not disappear, it changed location and presentation inside the balance sheet.

Current In The Accounts, Long-Dated In The Contract

Note 29(d) is where the story becomes much sharper. On October 10, 2024, the company, its controller Erez Dehbeni, and Baladi Holdings signed a loan agreement under which the intercompany balance left after the first post-bond dividend became a loan to Baladi Holdings. The note says the amount was roughly NIS 39 million at the outset, including about NIS 4 million versus the controller and about NIS 35 million versus Baladi Holdings.

The more important point is the structure, not just the starting number. The contractual maturity is not 2026. Principal and interest are due in one payment roughly five years after the first dividend, and no later than June 30, 2029. Baladi Holdings may prepay from any source without penalty, and it may also extend the loan by another 24 months with prior notice.

That is what creates the analytical gap. As of December 31, 2025, the company classifies the NIS 33.69 million balance as a short-term receivable. Why? Because it estimates that the loan will be repaid within 12 months from the balance-sheet date. That wording matters. The company is not saying the underlying contract was rewritten into short-dated paper. It is saying management expects repayment within a year.

Those are not the same thing. The accounting classification may well be valid, but for analytical purposes the reader should hold two thoughts at once:

• In the accounts, the loan is presented as a current asset.
• Economically, it remains a related-party loan whose base contract is much longer and includes an extension option.

This is exactly why the other-receivables line looks more liquid than it really is. Of the NIS 100.8 million in that line, NIS 37.4 million is tied to related parties, and NIS 33.7 million of that is the Baladi Holdings loan. Put differently, more than a third of the other-receivables line and roughly half of the year-end cash balance are sitting against one related-party exposure.

That does not automatically mean the loan will not be repaid. Management may be right, and repayment may indeed arrive during 2026. But until that happens, this is not the same as cash already in the bank, nor is it the same as a normal operating receivable collected through the regular trading cycle. It is an internal exposure inside the control sphere.

The Dividend That Stayed Inside The Company Is Not Free Excess Cash

Section 4.2 of the narrative report shows that the board approved four NIS 10 million dividends during 2025, for a total of NIS 40 million. On a surface read, that looks like another sign of balance-sheet comfort: a company returning to that payout cadence must feel good about liquidity.

But the footnote under that table says something more important. Out of those distributions, and under an irrevocable instruction from the controller, roughly NIS 17 million was not actually paid to Mr. Dehbeni, net of tax, and was instead recorded to his credit in the company's books. That amount will only be paid after the loan to the company under his control is repaid.

Note 29(d) adds one more layer. As long as the loan balance exists, the company will not transfer to the controller the distributions due to him up to the amount of the outstanding loan. Those amounts accumulate in his favor, and after the loan is repaid they will be transferred. Until then, they also accrue interest at the same rate that applies to the loan balance.

So part of what appears to be "cash that remained inside the company" is not really free surplus. It is cash that stayed inside the company against a related-party loan and against a future claim of the controller. That is a sensible internal protection mechanism, but it is not the same as a simple decision not to distribute and therefore not to create an obligation.

This also explains why the "other long-term liabilities" line rose to NIS 17.1 million at year-end 2025, while at year-end 2024 the comparable balance sat on the asset side within other receivables. Analytically, the exposure did not disappear. It moved from one side of the balance sheet to the other. A reader who looks only at working capital can easily miss that part of the apparent improvement in the short-term structure also reflects a re-location of the same controller-related economics.

The cash-flow statement reinforces the point. The narrative section shows NIS 40 million of dividends approved in 2025, but the liquidity section shows roughly NIS 20 million of dividend payments in financing cash flow during the year. Not every declared dividend immediately became cash outflow, and part of that gap is explained by the mechanism that kept the controller's distributions inside the company.

The Working-Capital Improvement Is Real, But It Is Not The Same Thing As Deployable Cash

There are two mistakes to avoid here.

The first mistake is to argue that the balance-sheet reset is somehow fake. It is not. Baladi really did remove most of the short-term bank pressure, really did lift cash sharply, and really did finish the year with far wider positive working capital. Even if you strip the related-party balance out of other receivables, working capital remains strongly positive.

The second mistake is to read all NIS 534 million of working capital as if it were deployable liquidity. That is not true either. Working capital in a food-import and distribution business is naturally tied to inventory, receivables, and trade credit. At year-end 2025, Baladi had NIS 218.8 million in inventory, NIS 295.5 million in customer receivables, and another NIS 37.4 million in related-party balances within the other-receivables line. That is operating flexibility, not a free cash pile.

So the right question is not whether the company has liquidity. It does. The right question is what kind of liquidity it has. Immediate cash is NIS 72.4 million. Related-party balances inside other receivables are NIS 37.4 million. The accrued dividend payable to the controller is NIS 17.1 million. Those three lines do not tell the same story.

From a balance-sheet-quality perspective, the conclusion is straightforward:

• Baladi looks materially stronger against short-term bank pressure, and that is a real improvement.
• Part of the comfort in the current-asset section relies on management's expectation that the Baladi Holdings loan will be repaid within 12 months.
• Part of the cash balance was preserved because controller dividends were not actually paid out, even though they are already marked as a future obligation.

That does not make the company fragile. It does mean that the cash effectively accessible to ordinary shareholders, or alternatively the cash genuinely open for fresh capital-allocation decisions, is narrower than the first balance-sheet read suggests.

The next test is simple. If Baladi actually collects the Baladi Holdings loan during 2026, and the controller-related balance closes without creating a new layer of delay or extension, the conservative reading of the 2025 current classification will fade quickly. If not, the balance sheet already gave the clue: the line was current in the accounts, but the contract was never short-dated.

Conclusion

Baladi's end-2025 balance sheet is cleaner, but not every liquid-looking line is equally accessible. The cash is there, but part of the comfort sits inside an internal loop between the company, the controller, and Baladi Holdings. The Baladi Holdings loan improves current assets only because management expects repayment within a year, while the underlying contract runs much longer. At the same time, NIS 17.1 million of controller dividends stayed inside the company and support the cash balance, but they are already marked as a future liability rather than truly free surplus.

That is the difference between a safer-looking balance sheet and cash that is genuinely open for use. Baladi has already come a long way in exiting short-term debt pressure. The next step is to prove that the next layer of clean-up is not only accounting presentation, but actual cash realization.