Melran: NTA Is Already Paying, But Stage 2 Has Not Fallen Yet

Melran received the first real proof in Q1 that the NTA arrangement is more than a legal framework: NIS 10.4 million has already been collected, the infrastructure-customer exposure fell to roughly NIS 41 million, and the NTA projects returned to an operating track where receipts should flow directly to the company or into a protected trust account. That is a positive change from year-end 2025, because the repayment source no longer depends only on a broad creditor-arrangement process around a customer that entered stay-of-proceedings. Still, the credit has not fully normalized: roughly NIS 20 million of the same exposure remains in Stage 2, and total group Stage 2 credit rose to NIS 43.1 million. The implication is that the collection mechanism has started working before the contracts removed all uncertainty around projects where explicit minimum payment amounts have not yet been anchored. The next proof point is not another standalone receipt headline, but an orderly decline in Stage 2 and deeply overdue balances without a migration into Stage 3.

Receipts Prove The Mechanism Is Working

The positive side of the infrastructure exposure is clearer now than it was at year-end 2025. On January 8, 2026, the infrastructure customer filed for a stay of proceedings, and on February 5, 2026, the NTA arrangement was approved. The arrangement removed the NTA projects from the stay-of-proceedings framework, added NTA as a party to the agreement, set shorter timetables, and preserved a collection mechanism under which NTA receipts are directed first to cover principal and interest until a target amount above the debt level is reached.

In Q1, that theory began turning into cash. Receipts under the arrangement totaled roughly NIS 10.4 million, and the gross credit balance to the customer fell from roughly NIS 49 million at year-end 2025 to roughly NIS 41 million at the end of March. This is not a full closure of the event, but it answers an important question left open at year-end: whether the NTA arrangement can actually generate cash collection, or only explain why the company avoided classifying the entire exposure as defaulted.

The business meaning is that the risk has changed shape. It looks less like a general exposure to a customer in insolvency proceedings, and more like an execution test around specific projects, handovers, and final settlements with a government-related work commissioner. That reduces the risk of having no party to collect from, but leaves open how much and when each project will actually pay.

Stage 2 Still Carries The Unresolved Part

The number that keeps the story from being clean is not the amount collected, but what remains after the collection. Out of roughly NIS 41 million of exposure to the infrastructure customer, roughly NIS 21 million was classified as Stage 1 and roughly NIS 20 million is still in Stage 2. That classification does not mean the arrangement failed. It reflects the fact that in some projects, signed documents still do not explicitly state minimum payment amounts, even though part of the work has already been completed.

The table sharpens the difference between collection and normalization. The company can point to real receipts, and that matters. But as long as the Stage 2 portion does not fall, the market has not yet received proof that the unresolved exposure has become ordinary credit again. The decline in the customer balance mainly looks like a reduction in total exposure, not a resolution of the risk layer identified at year-end 2025.

Aging Keeps The Read From Fully Normalizing

Balances overdue by more than 181 days are the additional control point. At group level, they fell versus March 2025, but rose versus year-end 2025 from NIS 28.5 million to NIS 39.4 million. Within that figure, customers under arrangements where consideration was paid other than in cash accounted for NIS 22.2 million of deeply overdue balances, compared with NIS 14.6 million at year-end 2025.

That does not fully contradict the positive NTA read, because Stage 3 barely moved: NIS 35.0 million at the end of March versus NIS 34.4 million at year-end 2025. But it is a yellow flag. A quarter with almost no credit-loss expense should also show clearer improvement in aging, otherwise the low provisioning looks early relative to the pace at which problem balances are actually being closed.

This matters especially in the infrastructure exposure, because the company's distinction between Stage 1 and Stage 2 depends on document maturity and payment certainty, not only on the existence of a collection arrangement. If the next quarters bring more receipts but Stage 2 and deep aging remain high, the explanation that this is a concentrated, one-customer event will remain possible, but less convincing.

The Next Test Is Classification, Not Another Receipt

The current evidence leans positive, but it is not decisive yet. The NTA arrangement is already producing cash and shows that the company was not relying on an empty assumption when it kept much of the exposure outside Stage 3. On the other hand, roughly NIS 20 million still needs enough contractual certainty to exit Stage 2, and the increase in deeply overdue balances prevents the collection picture from looking normalized. The near-term checkpoint is simple: whether the unresolved exposure declines through receipts or explicit minimum-payment anchoring, and whether group Stage 2 starts falling from NIS 43.1 million. If that happens without an increase in Stage 3, the infrastructure exposure will start to look like a concentrated event that is being closed. If not, the market is likely to keep treating NTA receipts as partial evidence rather than closure of the credit-quality test.