Yozmot: Why Adjusted Equity Is Not The Same As A Real Cash Cushion
The main article already showed that Yozmot’s covenant picture looks safer than its reported equity base. This follow-up isolates why: at the end of 2025 total equity was only NIS 30.3 million, adjusted equity jumped to NIS 76.0 million mainly because of subordinated shareholder loans, and Series A and Series B no longer sit on the same layer of protection.
The main article already pointed to the gap between Yozmot’s reported equity and the more comfortable impression created by the covenant tables. This follow-up isolates only that mechanism: what is actually being counted as adjusted equity, why that strengthens the bondholders more than it strengthens the company’s cash cushion, and why Series A and Series B are already reading the same balance sheet in different ways.
To read Yozmot correctly, four numbers need to be held together. At the end of 2025 the consolidated balance sheet shows total equity of NIS 30.293 million, of which only NIS 21.895 million is attributable to shareholders. At the same date, the covenant table shows adjusted equity of NIS 76.039 million. And on the asset side, alongside NIS 41.163 million of cash and cash equivalents, there are also NIS 78.144 million of trust deposits. Anyone compressing all of that into one word, “cushion,” is missing the point.
Four points frame the picture:
- Reported equity is still thin. NIS 30.3 million of total equity against a NIS 362.9 million balance sheet, and only NIS 21.9 million attributable to shareholders.
- Adjusted equity is far larger than reported equity. The covenant table at December 31, 2025 shows NIS 76.039 million for both Series A and Series B.
- That uplift comes from a subordinated shareholder-loan layer, not from profit retained in cash. The balance-sheet line for related-party loans stands at NIS 45.746 million, exactly the size of the gap between reported total equity and adjusted equity.
- Series B proceeds are not a free cash cushion either. At the end of 2025, about NIS 78.1 million of the Series B proceeds was still held in trust, and only about NIS 14.3 million had been released by the date the annual report was approved, for Oushiskin 11 and Kaplinsky 20.
That chart does not mean Yozmot has no funding. It says something more precise: its protection layer is mainly contractual and structural, not a layer of unrestricted cash.
Where adjusted equity gets its size
The simplest way to see it is through the year-end numbers. Total equity stands at NIS 30.293 million. The related-party-loan line stands at NIS 45.746 million. And the covenant table shows adjusted equity of NIS 76.039 million. In other words, the gap between reported equity and covenant equity is not being created by strong earnings or distributable cash. It is being created by a financing layer that has been contractually pushed lower in the capital structure.
That is not a technical footnote. Section 9.1.10 states that the BPO loan agreement was updated on February 26, 2025, and that BPO’s repayment rights on principal and accrued interest are subordinated to the rights of the company’s bondholders. Principal and interest are to be repaid only after the bonds have been repaid in full, and only out of an amount equal to 80% of the actual surpluses received by the company or group companies, excluding surpluses already pledged as collateral to bond series still outstanding. That is exactly why the loan can be counted as part of the covenant protection.
But that is also exactly why it should not be read as a cash cushion. This is a legal cushion, not a liquidity cushion. It improves the bondholders’ place in the waterfall and reduces the competition above them, but it does not turn those millions into free cash that management can deploy at will.
There is also an accounting layer here. The BPO loan itself stood at NIS 51.216 million including interest and indexation at the report date, yet Note 17 states that the related-party loans are measured in the financial statements using a fair-value rate of 8.98%, not purely on contractual terms. That is why the reader also needs to separate the contractual balance of the shareholder loan from the way that same layer appears in the balance sheet and in the covenant metrics.
Why this strengthens the covenant, but does not create a real cash cushion
The easy mistake in reading Yozmot is to think that high adjusted equity means a wide financial cushion. The annual report shows something else. On the asset side there is NIS 41.163 million of cash and cash equivalents, but there is also NIS 78.144 million of trust deposits. Economically, those are very different numbers.
The first is cash. The second sits behind a release mechanism. Note 18 states explicitly that at the end of 2025 the balance of Series B proceeds still held in trust stood at about NIS 78.1 million. The same note also states that by the time the financial statements were approved, only about NIS 14.3 million had been released, for Oushiskin 11 and Kaplinsky 20. So even after the debt was raised, the money did not immediately become a general corporate cushion. It remained tied to milestones, to specific projects, and to a defined collateral waterfall.
The same logic applies to the shareholder-loan layer. Note 17 states that any proceeds from enforcing the collateral securing the BPO loan, up to the company’s then-outstanding debt to the bond series, are to be deposited into a designated account pledged with a first-ranking fixed charge in favor of the trustee for the bondholders until the bonds are fully repaid. That means even when the shareholder loan improves the bondholders’ position, it does so through strengthening the security waterfall, not through creating flexible corporate liquidity.
That is the core distinction. It is entirely fair to argue that this structure is good for the bonds. It is much harder to argue that it is equivalent to a real cash cushion. A real cash cushion is measured by the ability to absorb delays, support equity injections into new projects, or get through a weak period without every shekel already being earmarked. Yozmot’s adjusted equity is doing something else: it is reorganizing the order of rights between financing layers.
Series A and Series B are not sitting on the same risk story
The most misleading item in the covenant table is not a weak number. It is a similar number. Both Series A and Series B show adjusted equity of NIS 76.039 million. Anyone stopping there could assume that both bond series enjoy the same margin of safety. They do not.
| Test | Series A | Series B | Why it matters |
|---|---|---|---|
| Adjusted-equity floor | NIS 76.039 million actual versus a NIS 25 million floor | NIS 76.039 million actual versus a NIS 30 million floor | The headline looks similar, but Series B sits on a slightly higher minimum floor |
| Balance-sheet ratio, actual | 20.95% versus a 20% immediate-acceleration floor | 23.63% versus a 20% immediate-acceleration floor | Series A is above the floor but much less comfortable, Series B is still above the 22.5% line |
| Interest step-up threshold | Below 22.5%, so the 20.95% ratio is already beneath the rate-adjustment line | Above 22.5%, so the 23.63% ratio still avoids that trigger | Same balance sheet, not the same comfort zone |
| Debt-to-collateral ratio, actual | 74.95% versus a 100% acceleration ceiling and a 70% series-expansion gate | 0.42% versus a 95% acceleration ceiling and a 65% expansion gate | Series A is far from distress but already fails the expansion gate, while Series B looks very comfortable because the money and collateral are still ring-fenced |
| Status of proceeds at end-2025 | Series A proceeds had already been fully received by the company by the time the statements were approved | NIS 78.1 million was still in trust at year-end, and only part had been released by the approval date | Series B benefits from stronger protection, but it is protection still earmarked to specific projects |
Two very different conclusions follow from that table. Series A is already reading Yozmot through a more compressed corporate balance sheet. The equity-to-balance-sheet ratio of 20.95% is still above the immediate-acceleration floor, but it is already below the 22.5% threshold that triggers the interest step-up. The debt-to-collateral ratio of 74.95% is still below the 100% acceleration ceiling, yet already above the 70% threshold required for series expansion. That is not a distress scenario, but it is not roomy.
Series B is telling a different story altogether. The 23.63% ratio still sits above the 22.5% threshold, and the 0.42% debt-to-collateral ratio reflects a moment when most of the issuance proceeds were still sitting in trust and supporting the holders. That is a much stronger margin, but it is stronger because the structure is newer, tighter and more ring-fenced. So Series B is not proof that Yozmot has surplus cash. It is proof that Series B holders currently sit behind a stronger trust-and-collateral architecture.
There is also a subtler difference. In the Series B description, the company distinguishes between “adjusted equity” and “adjusted shareholders’ equity.” The first is based on equity attributable to shareholders plus subordinated shareholder loans. The second includes non-controlling interests as well. That is another reason the same headline number should not be read as if it were one simple measure. This is a covenant mechanism, not a clean measure of balance-sheet quality for ordinary shareholders.
What actually needs to change for this gap to close
The path to closing the gap is not technical. It is economic. Yozmot will have to grow reported equity that does not mainly lean on another layer of subordinated shareholder loans, show that project surpluses are actually moving upstream, and turn more of Series B’s support from a trust mechanism into cash that enters the business and stays there.
Three questions will drive the read from here:
- Will reported equity start growing faster than reliance on subordinated shareholder loans.
- Will Series B releases continue at a pace that turns ring-fenced protection into real operating flexibility.
- Will Series A move back to a more comfortable margin above the 22.5% line and away from the sense that its covenant support rests on too narrow a layer.
The bottom line is that Yozmot’s adjusted equity is not fictitious. It does give bondholders real protection, because the shareholder loans are subordinated and the Series B proceeds sit inside a clear trust-and-collateral framework. But anyone reading NIS 76 million as proof of a real cash cushion is missing the point. The real cushion begins only when reported equity grows, when project surpluses are actually released, and when the company needs less contractual support in order to look safe.
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