Petrochemicals' repayment source: how much of 2027 really depends on Bazan
Series 11 and the trustee cash bought Petrochemicals time, but not an independent repayment engine. Even after the dividend approved in March 2026, most of the 2027 wall still depends on Bazan, its dividend stream, or the ability to refinance against Bazan shares.
The main article already made the broader point: at Petrochemicals, large value on paper is not the same thing as cash that can actually move up from Bazan to the holdco. This follow-up isolates only the repayment-source question. The issue here is not whether Bazan is worth more than the debt. The issue is which part of the 2027 wall is already sitting in dedicated cash or in an already approved dividend, and which part still rises or falls with Bazan.
To avoid mixing frames, this piece uses an all-in repayment bridge. It counts only sources that are already identified for debt service, such as trustee deposits and a dividend that has already been approved, against liabilities that are already recorded. It does not count equity, Bazan’s carrying value, or hypothetical future monetization steps that are not yet in hand.
What 2025 Actually Funded
In 2025 Petrochemicals worked with only two large identified sources. The first was the Series 11 issuance, which brought in ILS 268.8 million net. The second was ILS 45.0 million of dividend cash, the company’s share of the Bazan distribution. Against those two sources, the company funded three main uses: ILS 133.4 million of buybacks in Series 10, ILS 140.8 million of early redemption in Series 9, and ILS 4.0 million of operating expenses funded out of the dividend proceeds.
That is the key discipline. 2025 did not create a new repayment engine. It executed a time swap. The capital market funded debt reduction through Series 11, and Bazan provided the only real upstream cash. Everything else was routing those two sources.
This chart is not a full reconstruction of the cash-flow statement. It isolates the two large sources and the three main uses to show what really happened: Series 11 did not remove dependence on Bazan, it pushed part of the pressure outward. The gap versus year-end trustee cash is mainly explained by ILS 4.3 million of financing income from restricted deposits and by smaller additional movements.
The balance sheet shows the same conclusion more sharply. Year-end 2025 closed with ILS 39.423 million of restricted deposits with bond trustees, of which ILS 39.411 million sat with the Series 11 trustee, and with only ILS 6.292 million of cash and cash equivalents at the company. But Note 5 makes the limitation explicit: the deposit with the Series 11 trustee may be used only for purchases of Series 9 and Series 10 bonds. It is financed firepower, but it is not free cash.
What Already Looks Funded, And What Still Does Not
The relevant debt map at the end of 2025 looks like this:
| Layer | Amount | What it really means |
|---|---|---|
| Restricted deposits with trustees | ILS 39.4 million | A source already in hand, but debt-dedicated |
| Series 9 at December 31, 2025 | ILS 34.9 million | Pari debt balance including accrued interest |
| Series 10 at December 31, 2025 | ILS 201.6 million | Book debt after the 2025 repurchases |
| Deferred benefit for Series 10 holders | ILS 19.1 million | An additional payment layer tied to Bazan |
| Bazan dividend approved on March 25, 2026 | About ILS 26.97 million, company share | A source already approved, but Bazan-dependent |
| Series 9 redemption linked to that dividend | About ILS 23.0 million | An already declared debt use |
That table already shows the gap. Trustee cash and the March 2026 dividend can take care of most of the remaining Series 9 path. They do not solve Series 10.
This is an analytical bridge rather than a reported line item. It takes the debt layer that is visible at year-end 2025, Series 9 in pari debt terms including accrued interest, Series 10 in book-debt terms, and the deferred-benefit liability as recorded, and sets against it only two already identified sources: trustee cash and the additional Series 9 redemption already linked to Bazan’s March 2026 dividend. The result is blunt: even after those two sources, about ILS 193.2 million of identified obligations still do not have a visible non-Bazan source.
And that ILS 193.2 million is not the full 2027 cash bill. Series 10 carries a 10.54% coupon and is repaid in one bullet on July 31, 2027, so interest continues to accrue after December 31, 2025. The deferred benefit also moves with Bazan’s share price. In other words, this bridge is a floor for the unresolved amount, not a ceiling.
The Real 2027 Wall Is Series 10, Not Series 9
This is where the reading can easily go wrong. Series 9 still exists, but it is no longer the center of the argument. At December 31, 2025 its debt balance stood at ILS 34.9 million, and on March 25, 2026 the company already tied its share of Bazan’s dividend to another partial redemption of about ILS 23.0 million. Even if a tail remains after that, it is no longer the real wall.
The real wall is Series 10. At year-end 2025 it still carried ILS 149.619 million of par value, ILS 52.019 million of accrued coupon, and ILS 201.565 million of book debt. This is subordinated debt secured by a second lien on all Bazan shares, but it is still a single-payment maturity on July 31, 2027, and the deferred benefit sits on top of it.
The late-December and early-January immediate reports sharpen how unresolved that layer still is. Between December 31, 2025 and January 14, 2026 the amount of Series 10 outstanding fell only from ILS 149.619 million par to ILS 149.361 million par. In other words, after year-end the company repurchased only about ILS 0.26 million par. That is a signal of financing discipline. It is not a move that changes the 2027 wall.
This also connects directly to the company’s own language. The report says there are no bond payments until 2027 because 2025 already delivered a meaningful partial refinancing through the Series 11 issuance. That is the key distinction. There is no immediate pressure, but lack of immediate pressure is not the same thing as a repayment source. It only proves the company bought time to reach 2027 with a smaller wall.
Even After The Old Bonds Disappear, Bazan’s Dividend Still Belongs To Creditors First
One could have assumed that once Series 9 and Series 10 are gone, Bazan’s dividend stream finally becomes free cash for the holdco. The Series 11 trust deed says otherwise.
After full and final repayment of Series 9 and Series 10, the Bazan shares are meant to move into a first-priority pledge for Series 11 in an amount sufficient to support a 66% LTV ratio. From that point, if the LTV at the Bazan dividend record date is above 60%, the company must carry out an early redemption of Series 11 using a portion of the dividend that is not lower than 60% of the dividend received from the pledged shares, and if needed more than that, until the ratio comes back to 60%.
And if the LTV at that date is 60% or lower, even then 60% of the dividend cash goes to early redemption of Series 11. Only the remaining 40% is released to the company. In addition, the trustee may transfer a proportional share of ILS 5 million per year to the company for expenses, and even that comes only out of received dividend cash.
The implication is simple: the Bazan pipe does not automatically become an equity pipe once Series 9 is almost gone. It remains a creditor pipe first, and only then a shareholder pipe. So anyone who expects Bazan to keep paying dividends still needs to ask not just whether a dividend will be declared, but how much of it will remain at the holdco after the pledge and early-redemption mechanics.
Conclusion
The main article argued that Petrochemicals looks richer in the accounts than in accessible cash. This continuation adds the funding layer: part of the route to 2027 is already marked, but mainly in the easier section of the path. Trustee cash and the dividend approved in March 2026 give the company visible ammunition for Series 9. They do not solve Series 10 and they do not bypass the deferred benefit.
So how much of 2027 really depends on Bazan? The answer is fairly sharp. More than depends on the trustee cash, and less than the accounting balance sheet may tempt you to think. Series 11 shortened the clock. It did not replace the engine. The engine is still the same engine: Bazan dividends, Bazan’s share price, and the ability to refinance against that same collateral.
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