Penthouse: The debt, collateral, and covenant test
Penthouse ended 2025 with NIS 1.64 billion of interest-bearing liabilities, versus NIS 81.5 million a year earlier. The filing shows formal compliance with every covenant package, but also a denser debt structure, collateral already serving several layers, and a 2026 opening with Mifraz Amnon on bridge financing and another payment due for Pai Siam shares.
What This Follow-up Is Isolating
The main article argued that Penthouse looked stronger in the accounts than in the cash it had actually converted, which makes financing a core part of the thesis rather than a side note. This follow-up isolates that layer only: what debt now sits on the group after the Pai Siam control transaction, what collateral supports it, and what year-end covenant compliance really means.
The first number that matters here is not earnings but debt. Interest-bearing liabilities jumped to NIS 1.637 billion at the end of 2025, from only NIS 81.5 million a year earlier. That is not just balance-sheet growth. It is an almost complete change in risk profile: instead of a relatively narrow debt layer, Penthouse now sits on a mix of bank credit, listed debt at the parent, listed debt at Pai Siam, asset pledges, and deferred consideration for additional share purchases.
The good news is that the filing does not show a covenant breach. The less comfortable news is that the same documents also show how dense the system has already become: the parent bond proceeds were largely earmarked almost immediately, lenders at the asset level agreed to cancel a debt-service test and move to LTV, and after the balance-sheet date the group still had NIS 85 million of bridge financing at Mifraz Amnon through April 1, 2026 together with a remaining NIS 54.254 million payment for another 6.72% of Pai Siam due by July 20, 2026.
Debt Is No Longer A Side Issue
At a high level, Penthouse's year-end debt stack is now almost entirely two layers: bank debt and tradable bonds. Banks account for about 58.5% of the balance, tradable bonds for about 40.7%, and everything else is marginal.
The less obvious point is where that jump actually came from. At the Pai Siam acquisition date, the identifiable liabilities brought in included NIS 790.1 million of loans and credit facilities and NIS 278.3 million of bonds. Together, that is about NIS 1.07 billion. In other words, roughly two thirds of the debt stack visible at year-end 2025 came in with the Pai Siam control transaction itself. Anyone still reading Penthouse as if it were mainly Golden Colony plus a new bond layer is missing the core shift.
The split between current and non-current debt also matters. At year-end the group showed NIS 89.4 million of current interest-bearing liabilities against NIS 1.547 billion of non-current liabilities. That sounds comfortable on the surface, but only on the surface. Some of the real pressure was pushed just beyond the balance-sheet date rather than removed from it. That is clearest at Mifraz Amnon, where two loans totaling NIS 80.1 million that had been due in January 2026 were, after the balance-sheet date, rolled into a single NIS 85 million loan for only three months.
The Parent Bond Did Not Create Much Fresh Slack
In August 2025 the parent completed its first listed bond issue, Series A, with gross principal of about NIS 143 million. The notes carry a CPI-linked 3.42% coupon, an effective rate of about 3.81%, and a principal schedule in which only 5% amortizes in June 2029, another 5% in June 2030, and the remaining 90% in June 2031. On first read, that looks like a long and comfortable layer of funding.
But the proceeds page shows that the issuance created very little truly free room. Net proceeds were about NIS 140.4 million, and the filing maps them to fairly specific uses:
| Main use | Amount | What it means economically |
|---|---|---|
| Repayment of a loan taken for the housing cluster | Up to about NIS 85 million, used on August 14, 2025 | The bond replaced part of bank financing rather than creating equivalent fresh liquidity |
| Purchase of up to 6.72% more of Pai Siam | Up to about NIS 55 million, at the company's discretion, with payment due in July 2026 | A large part of the bond also funds a higher concentration in Pai Siam, not only deleveraging |
| Remainder | Residual amount for ongoing activity and further investments | In practice, almost the entire net raise already had a frame of use |
That matters because the 6.72% Pai Siam purchase already created a clear economic obligation at the parent. Total consideration is NIS 85.282 million. The advance payment, 10% of the total, was paid on February 19, 2025. Four postdated checks totaling NIS 22.5 million had already been paid by the approval date of the financial statements. What remains is the heavy part: NIS 54.254 million, about 63.6% of the total consideration, due by July 20, 2026.
So the right reading of the parent bond is not simply that Penthouse diversified funding. That is true, but incomplete. The fuller reading is that the company used it to replace part of existing asset financing while also helping fund a larger Pai Siam stake. That can create value if Pai Siam keeps pushing value upward. It also means the new debt does not sit only against a stable asset, but against a stable asset plus a still-unfinished share-purchase obligation.
The Collateral Map Is Denser Than The Headline
The headline marketing line on Series A is simple: the bond is backed by Golden Colony. The filing itself describes a denser picture.
On one hand, the company says explicitly that Golden Colony was pledged as collateral for the parent bond. On the other hand, the collateral note says that, to secure obligations to banking corporations, first-ranking fixed charges without limitation in amount were already registered over the rights in Golden Colony, the contractual rights vis-a-vis Amidar, the rental income from the commercial building, the insurance policies, and also a floating charge over the mortgages of the housing cluster. The balance of secured obligations disclosed there was NIS 141.244 million.
That does not automatically mean stress. The filing does not say there is a breach, and it does not give a full ranking map between every layer here. But it does say something more important: Golden Colony is not a clean asset backing only one debt story. It is the core asset that already supports several credit narratives at the same time.
| Collateral | Given to | Why it matters |
|---|---|---|
| Golden Colony | Parent bond Series A | The parent company's core asset is also the anchor of its first public bond |
| Rights in Golden Colony, the Amidar contract, commercial rents, insurance policies, and the mortgages | Banking corporations, against NIS 141.244 million of secured obligations | The same asset envelope is already serving the banking system as well |
| 5% Aspen shareholding transferred to a trustee | Aspen, to secure payment for the 6.72% Pai Siam share purchase | The share-purchase transaction also created its own dedicated collateral layer |
| The purchased Pai Siam shares, proportionate to the advance paid | In favor of the company | The company received partial security for the advance, but that does not offset the bulk of the deferred payment |
| Personal guarantee by the controlling shareholder | Banking corporations | Bank lenders still rely partly on sponsor support, not only on the asset base |
In other words, Penthouse's collateral structure is no longer a clean one-asset-one-creditor story. It is a web of asset pledges, share pledges, and owner guarantees. The more crowded such a structure becomes, the less the economic value of "collateral" depends on the headline and the more it depends on ranking and refinancing ability.
Covenants Are Intact, But The Wording Shows Where Lenders Already Pressed
On paper, year-end 2025 looks calm. The company says it is in compliance with the parent bond covenants. Pai Siam says it is in compliance with Series A and Series B. And even after Pai Siam issued Series C in January 2026, the filing says that, as of the signing date, Pai Siam remained in compliance there as well.
But inside that calm sits the more important insight. The most interesting covenant event of 2025 was not a breach, but a change in what lenders chose to test. In July 2025, for the Ibis Styles Jerusalem City Center and Ibis Jerusalem City Center hotels, the bank approved a full cancellation of the debt-service-coverage ratio test, replacing it with an LTV ceiling of 70% during the operating period.
That matters. When a lender gives up on a debt-service test and moves to an asset-value test, it is not necessarily saying the asset is weak. It is saying the collateral is more comfortable than operating cash flow as the core credit anchor.
| Layer | Main tests | What the filing actually gives |
|---|---|---|
| Parent bond Series A | 70% LTV, equity-to-balance-sheet ratio, adjusted net financial debt-to-net CAP, liabilities-to-equity ratio | The company says it is in compliance, but these pages do not disclose actual headroom |
| Pai Siam bond Series A | Minimum equity of NIS 520 million and net financial debt-to-net CAP of up to 75% for two consecutive quarters, plus dividend restrictions | There is also a coupon step-up if equity falls below NIS 585 million or the ratio rises above 70% |
| Pai Siam bond Series B | Minimum equity of NIS 535 million and net financial debt-to-net CAP of up to 75% for two consecutive quarters, plus dividend restrictions | There is also a coupon step-up if equity falls below NIS 630 million or the ratio rises above 69% |
| Jerusalem hotel financing | Maximum 70% LTV during operation | The DSCR test was removed, which is itself a signal that the lender prefers collateral value to debt-service comfort |
What is really interesting here is not only that the company is compliant. It is that financing discipline is being checked in several layers at once: at the parent, at Pai Siam, and at the hotel-asset level. So any easy reading of "covenants are fine" misses that different layers are being tested for different kinds of comfort.
CPI Linkage Is A Weak Hedge, And Rate Sensitivity Is Already Material
This is where the filing stops being an abstract capital-structure story and becomes a story about real money. The interest-rate sensitivity table shows that a 1% increase in rates cuts profit after tax by NIS 7.601 million, and a 3% increase cuts it by NIS 22.802 million. That is not noise. In a leveraged group, it is a sensitivity layer that can erase a meaningful amount of accounting comfort quite quickly.
The intuitive counter-argument is that the company also has CPI-linked revenues. That is true, but the actual hedge is very small relative to the liabilities.
The gap is sharp. At a 1% CPI increase, revenue improves by only NIS 89 thousand, while bank loans cost NIS 1.988 million more, leaving a net hit of NIS 1.899 million after tax. At a 3% CPI increase, the revenue benefit is just NIS 267 thousand against NIS 5.963 million of extra bank-loan burden, for a net after-tax hit of NIS 5.696 million.
So yes, there is linkage on both sides, but not a real hedge. Revenue does get some support from CPI, mainly through the housing-cluster contract and the commercial building in Golden Colony, but the liability side is much larger. Economically, the leveraged side still dominates the compensating side.
What Has To Happen By Mid-2026
Penthouse's debt map is not yet telling a story of formal credit distress. It is telling a story of a very financing-heavy proof year.
The first checkpoint is Mifraz Amnon. After the balance-sheet date, two loans totaling NIS 80.1 million were refinanced into one NIS 85 million loan through April 1, 2026, at prime plus 0.95%. That is a bridge solution, not a final one.
The second checkpoint sits at Pai Siam. On January 26, 2026, Series C was issued with NIS 203.031 million principal, about NIS 197.346 million of gross proceeds, a fixed 6.2% coupon, and a principal schedule running from June 2027 through June 2032. That extends funding, but it also deepens the group's dependence on the bond market.
The third checkpoint sits at the parent. The remaining NIS 54.254 million consideration for Pai Siam shares still has to be paid by July 20, 2026, while Aspen's security over the 5% Aspen stake remains in force until full payment. So even if no covenant is broken, the real financing-comfort test of 2026 will be simpler: can the company get through the year without repeatedly rolling short obligations into a more expensive or more heavily pledged layer.
Conclusion
Penthouse ended 2025 in formal compliance, but with a very different debt structure from the one it started the year with. Debt is no longer a peripheral layer around Golden Colony. It has become a multi-layered system linking banks, public bonds, asset collateral, share collateral, and deferred consideration for additional shares.
So the key question right now is not whether there is a broken covenant. There is not, in the local evidence set. The real question is how much genuine room is left once the same system has to carry bridge financing at Mifraz Amnon, a new Pai Siam Series C, and the July 2026 payment for more Pai Siam shares. That is no longer a question of accounting value. It is a question of financing margin inside a capital structure that has become much tighter.
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