Supergas Power: Solo Cash, Commercial Paper, And Buybacks Do Not Sit On The Same Layer

The main article already established that the group looks more comfortable on a consolidated basis than it does at the shareholder layer. This follow-up isolates only that issue: where the cash actually sits when the parent has to support commercial paper, bond service, and the buyback authorizations approved on March 25, 2026. That matters now because the headline NIS 20 million of repurchase capacity sounds like excess capital, while at the parent level it rests on a much thinner layer.

On a consolidated basis the picture really is reasonable. The group generated NIS 86.1 million of cash from operations, reported NIS 742 million of equity, and met its bond covenants. But at the parent level, as of December 31, 2025, cash was only NIS 0.5 million. Against that sat NIS 150 million of commercial paper and NIS 55.8 million of current bond maturities. On the asset side there was no cash pile, but rather a short-term loan and current account balance to a held company of NIS 210.2 million, plus a long-term loan to a held company of NIS 355.2 million. That is why solo cash, commercial paper, and buybacks do not sit on the same layer.

Where The Flexibility Actually Sits

This is the core point. If you read only the consolidated balance sheet, it is easy to conclude that the group has enough resources to service debt, keep investing, and still consider buybacks. The solo balance sheet says something more precise: the parent has almost no free cash. What it mainly owns is a claim on group companies.

The chart is not arguing that the company cannot meet its obligations. It shows that the bridge between the parent and those obligations is not a cash cushion, but internal loans. The same disclosure also says that the loans the parent extended to a held company carry terms similar to the bonds and commercial paper it issued. In other words, the parent layer looks almost like a matched book: it raises money in the market, pushes it down, and carries an intercompany asset against it.

That changes how the buyback notices should be read. When the cash sits at the parent, a buyback is mostly a capital-allocation question. When the cash sits below the parent and the parent mainly owns an intercompany receivable, a buyback becomes first a question of cash access. That is a material gap between value that exists somewhere in the group and value that is already in the hands of the public entity that would execute the repurchase.

There is another layer below that. Under the short-term debt, the parent still carries NIS 331.8 million of long-term bonds. The amortization schedule shows NIS 59.8 million of principal in each of the next five years, and another NIS 107.4 million after that. So the real question is not whether there is debt. The question is whether the parent is building a cushion, or simply rotating between debt and internal receivables.

The 2025 Solo Cash Bridge: Short-Term Issuance Came In, But Cash Did Not Stay

The parent cash flow statement is sharper than the balance sheet. The group generated cash, but the parent barely did. In 2025 the parent posted negative operating cash flow of NIS 0.126 million. Investing activity consumed NIS 93.5 million, mainly through net lending to a subsidiary. Financing activity generated NIS 90.2 million, but that was driven almost entirely by NIS 150 million of commercial paper issuance offset by NIS 59.8 million of bond repayment.

This is the cash bridge to keep in mind before reading the March 2026 repurchase authorizations. The commercial paper did not build a thicker cash cushion. It mainly refinanced the parent layer and allowed capital to keep moving down into the group. The end result is clear: the parent started the year with NIS 3.9 million of cash and finished it with only NIS 0.5 million.

That leads to the most important conclusion in this continuation. Parent flexibility is not the same as the group's consolidated operating cash flow. It depends on two other things: the ability to pull cash back up from held companies, and the ability to keep rolling short-term debt without letting that debt compete with other capital-allocation actions. That is no longer an income-statement issue. It is a layer issue.

Why The Share Buyback And Bond Buyback Are Different Signals

On March 26, 2026, an older repurchase program expired unused. That earlier authorization covered up to NIS 50 million of shares and up to NIS 40 million of bonds, and no repurchases were made under it. One day earlier, on March 25, 2026, the board adopted two new programs, much smaller in scale, of up to NIS 10 million for shares and up to NIS 10 million for bonds, both valid until March 25, 2029. That is already a clue that this is not an aggressive deployment of surplus cash. It is the restoration of optionality, on a much narrower leash.

That distinction matters because the market may hear "NIS 20 million of buybacks" and treat both programs as one message. That would be the wrong read. The share program is almost a direct test of the parent's willingness to use scarce distributable headroom for shareholders. The bond program is much closer to refinancing discipline or debt optimization.

Even the language in the notices is different. The share report speaks in the language of confidence, earnings per share, and no expected harm to liquidity. The bond report speaks in the language of business opportunity, excess return, and better financial ratios. In other words, the company itself is telling the market that the two programs do not come from the same economic place.

There is one more detail worth keeping in view. Both notices stress that the decision does not obligate the company to repurchase any amount at all. So the right way to read March 2026 is not as proof that surplus cash is already waiting to be deployed, but as a statement that the board wants to preserve the option to act if market conditions and liquidity allow it.

What Needs To Happen Next For The Signal To Become Real

First test: cash has to move up to the parent without hurting the operating companies below it. As long as the parent's main short-term asset is an intercompany receivable, any real buyback remains dependent on upstream cash or on easy rollover of short-term debt.

Second test: the market has to separate authorization from execution. If the company mainly uses the bond program, investors may read that as balance-sheet discipline. If it actually buys back a meaningful amount of shares, that would be a much stronger signal, because it would say the board is willing to deploy real parent-level cash even after commercial paper and near-term bond service.

Third test: the maturity profile has to stay quiet. At least in Series A, the indenture allows a distribution only if consolidated equity after the distribution remains above NIS 375 million, there is no covenant breach, and the board sees no reasonable concern around the company's ability to meet its liabilities. Those conditions look comfortable today, but they do not create cash. They only define the legal perimeter.

This is also where the reasonable counter-thesis sits. One can argue that this read is too strict because the company is well inside its covenants, consolidated equity is high, the rating was reaffirmed with a stable outlook, and the intercompany loans are real assets that can turn back into cash over time. That is a serious argument. But even if one accepts it, the main distinction still stands: consolidated cash is not the same thing as accessible cash at the parent.

Bottom Line

This continuation sharpens one point: comfortable consolidated liquidity and tight parent-level cash can be true at the same time. That is exactly why the March 2026 buyback notices matter. They speak from the parent layer, not from the consolidated one.

The share buyback is the more aggressive signal because it almost reaches the full amount of disclosed distributable profits and is judged directly against the parent's equity flexibility. The bond buyback is a different signal: less "we have surplus cash" and more "we want the ability to act if our own debt is priced attractively." Until cash actually moves up or short-term debt comes down, the right headline is not surplus capital. It is optionality that still sits under a real liquidity test.