Givot Yahash: Who Gets Paid Before The Unit Holders

The main article argued that funding and execution still decide everything at Givot. This follow-up isolates one narrower question: if new money comes in, or if oil cash flow ever returns, who actually gets paid first. That is not a technical side issue. It is the question that decides whether an equity raise, option exercise, or renewed production creates value for unit holders, or merely buys more time for a financing structure already sitting on delays, pledges, and bridge loans.

The short answer is blunt. Unit holders do not have a clean line to future cash. Before money reaches them, it runs into pledged deposits supporting guarantees to the state and the Israel Land Authority, Naot Dekalim's collateral package over oil-sale rights and revenue streams from Meged 5 and Meged 6, a related-party debt layer of which a large part has already been pushed into short-term classification, and ordinary operating liabilities. The unit holder sits in the residual layer, not at the tap.

What matters even more is that the balance sheet slightly softens the picture. Related-party loans are carried at $22.964 million, but the financial-instruments note shows $26.09 million on nominal settlement values for that same layer. That gap comes from the accounting treatment of shareholder loans on favorable terms. It does not create breathing room for the units. It only shows that the economic question is how much must be repaid, not only what is booked.

Four key points:

• About 65% of the liability stack on nominal settlement values at year-end 2025 is related-party debt.
• $15.626 million of related-party debt is already classified as short term because the partnership is not meeting financial covenants.
• Naot Dekalim is not just another lender. It holds collateral over oil-sale rights, designated accounts, oil inventory, and the right to receive revenue from Meged 5 and Meged 6.
• Even if the approved capital raise is completed, a meaningful portion is already intended for debt repayment and current payments, and February 2026 added another bridge layer that is supposed to be repaid from the first issuance.

The Real Queue

The liquidity table shows what the consolidated balance sheet is less explicit about. At the end of 2025, the stack ahead of unit holders totals $39.917 million on nominal settlement values. Of that, $26.09 million is related-party debt, $1.795 million is another loan, $6.174 million is owed to suppliers and service providers, $5.232 million sits in payables and accruals, and another $626 thousand is management fees owed to the general partner. This is not a structure where unit holders wait directly for operating upside. They wait for what may remain after every layer above them has been dealt with.

The second point is speed. $3.763 million falls due within three months, and another $25.692 million within three months to one year. That is $29.455 million, roughly 74% of the whole stack, inside one year. This is no longer "patient" funding in the economic sense. It is a maturity wall that forces any new cash to play defense before it can become development capital.

And this is the part unit holders are most likely to miss. In the partnership-capital note, the layer attributable to unit holders is already negative $32.601 million. In other words, the units are not starting from zero and building upward. They are starting below zero, underneath a claims structure that already comes first both legally and in cash-flow terms.

The Locked Layer: Collateral Already Sitting On The Stream

Before looking at maturities, it helps to separate ordinary debt from debt that is already attached to an asset, a revenue stream, or restricted cash. That layer matters more than the headline total because it shows who is not only ahead of unit holders on paper, but already positioned on the source of future cash.

The critical detail is that Naot Dekalim's package does not stop at Meged 5. It also covers rights to receive revenue from Meged 6. So the question is not only whether the operating story can restart. The question is how much of any future cash flow would even be available to unit holders after a secured lender that is already attached to the revenue channel.

There is one important nuance. The annual report says that, as of the report date, there was no money in the cushion account. So Naot Dekalim is not currently sitting on a pile of free cash in that account. But that does not clear the picture. The collateral is built around the source from which cash is supposed to be generated, not only around cash that already exists today.

Debt That Has Become Shorter, Not More Patient

The loan note tells a two-track story. On one hand, related lenders are still giving the partnership oxygen. There is no blanket acceleration of the entire layer. On the other hand, the filings no longer allow anyone to present that layer as comfortably patient. $15.626 million of related-party loans has already been reclassified to short term because financial covenants are not being met. That is the moment when "patience" stops being a hard fact and becomes the lender's discretion.

Naot Dekalim is the clearest example. The original loan was NIS 20 million, carries 8.25% interest plus a 5% arrears component, and the full balance is presented as current because scheduled repayments are not being met. More importantly, the partnership itself says it is not meeting two financial covenants: minimum adjusted equity of $6 million, and a coverage ratio under which net revenue cash flow divided by expected principal and interest payment must not fall below 1.3. Naot Dekalim has not demanded early repayment, but non-acceleration is not a waiver. It is patience from a lender that already has collateral, not a margin of safety for unit holders.

The rest of the funding stack does not look like long-dated, comfortable capital either. Zahav Jerusalem and the Ben-David family account for a carrying balance of $12.133 million, and the loan list includes a long string of short balloon loans at prime plus 1.7% to 2%, some taken against bank loans. This does not look like capital slowly stretched into development. It looks like financing that keeps being rolled.

The sharpest point sits in the margins. At year-end, third-party loans still outstanding totaled NIS 5.7245 million, backed by personal guarantees from controlling shareholders. NIS 500 thousand and NIS 400 thousand carried 15% interest and were due on March 29, 2026. A NIS 4.5 million loan carried 14% interest and was due on October 31, 2026. This is not only a question of how much debt sits above the units. It is also a question of how expensive that debt is and how near those maturities are.

For unit holders, the important point is not whether the money comes from Ben-David entities, Naot Dekalim, or third parties. What matters is that the next cash entering the partnership will first meet a layer that needs repayment, extension, or at the very least continued lender tolerance. Any optimistic scenario around renewed activity therefore has to pass the financing test first. Without that, the units remain a claim waiting for a long line of creditors to finish before them.

February 2026: The Next Issuance Already Has A Job

If year-end 2025 showed the priority structure, February 2026 showed how that structure works in real time. The annual report says the partnership does not have the financial means to carry out the operation, that there is no certainty the remaining approved capital raise of about $7.5 million will actually be raised, and that the explanatory materials around the capital decision earmarked about $4.7 million for debt repayment and current payments. So even before asking whether the raise will happen, the report already shows that a meaningful part of it is not clean growth capital.

The January 2026 meeting notice makes that far more concrete. It says that because of the partnership's financial condition and the need for urgent payments, including repayment of a third-party loan of NIS 607 thousand, salaries, and current payments through the end of February, unit holders were asked to instruct the trustee and the supervisor to provide another NIS 1.3 million loan, interest free and without collateral, to be repaid from the first issuance that would be carried out.

The sharpest number in that notice is not the loan itself, but what would remain afterward. After the first loan, about $681 thousand remained with the trustee for the operation. If the extra NIS 1.3 million loan is added, that amount would fall to about $282 thousand based on the exchange rate at the time of the notice. Put simply, the partnership is not only raising bridge money outside the operating structure. It is pulling forward the use of money that had been earmarked for the operation itself.

There is one more layer that makes the point harsher. The notice says that if the supervisor uses the trust money for the operation and needs to use the first NIS 1 million loan as well, the partnership will repay that first loan within three days. That effectively turns the first issuance into a near-automatic repayment source for existing bridge funding. Before unit holders can ask what is left from new money, the documents already answer where it is expected to go.

What Is Left For The Unit Holders

This is the center of the story. Givot is not only a partnership that needs more money in order to move forward. It is a partnership where a large part of future money already meets prior claimants: the regulator through pledged guarantees, a secured lender through revenue pledges, related lenders whose loans have already become shorter because of covenant breaches, and other lenders and suppliers sitting on a near-term maturity schedule.

That does not prove there can never be theoretical value if the operation succeeds. It does mean investors need to distinguish between geological or operating value and value that is actually accessible to unit holders. As long as the unit sits under almost $40 million of liabilities on nominal settlement values, and as long as a large share of the next raise is supposed to repay bridge funding and cover current holes, the upside for the unit holder remains an option on what may be left at the end.

The final yellow flag is that the structure still depends on patience. Naot Dekalim has not accelerated despite covenant breaches and missed scheduled payments. Controlling parties continue to support the structure through guarantees and loans. The supervisor and the trustee were drawn into another bridge layer. That buys time, but time is not distributable value. The value test for unit holders will arrive only if financing appears that is large enough to roll the existing debt, preserve the operation, and still leave real surplus above all prior layers.

Conclusion

The right question at Givot is not only whether the next money will be found. It is who cuts it first. At the end of 2025 and the beginning of 2026, the documents show a clear order of priority: first pledged deposits, then a lender secured on the revenue stream, then related-party debt that has already shortened because of covenant breaches, then bridge funding, suppliers, and current payments. Unit holders remain at the end of that chain.

That is why the real test is not the geological story on its own. The real test is whether the next capital raise or future cash flow can pass through this priority stack without being absorbed by it. Until that changes, the unit's value remains secondary to the partnership's refinancing and survival problem.