Dalia Energy follow-up: at Ashkol, EBITDA still does not mean accessible cash

The main first-quarter article framed Dalia Energy's financing test around Dalia 2, Avshal, and the gas agreement, but Ashkol is still the layer where it is easiest to confuse operating performance with accessible cash. The quarter now gives a sharper quantitative test: Ashkol Yitzur reported EBITDA of NIS 126.5 million excluding one-offs and operating cash flow of NIS 191.5 million, but most of that cash was immediately absorbed by CAPEX, interest, lease principal, and debt repayments. After those uses, before restricted-deposit release and interest received, there was no real excess cash left. Historical DSCR and minimum forecast DSCR were only 1.09, against a 1.05 default threshold. This is not a distress picture, because Ashkol Yitzur still complies with its covenants and continues to generate operating cash flow. But it is a weak access picture: for Ashkol's value to move up to Dalia rather than appear only as EBITDA in a presentation, the company needs wider DSCR headroom, steady debt reduction, and actual cash movement upward.

EBITDA did not survive the cash-use waterfall

The earlier Ashkol analysis argued that EBITDA at the generation station is not the same thing as accessible profit at Dalia. In the first quarter of 2026, that argument is no longer only structural. It has a quarterly cash test: very strong operating cash flow on one side, and a list of cash uses that almost fully consumes it on the other.

The all-in cash picture here asks how much cash remained after the quarter's actual cash uses: capital investment, interest paid, lease principal, and debt repayments. This is not normalized cash generation before investment. It is a test of the real financial room available in the period.

The release of restricted deposits, interest received, and proceeds from asset sales closed the cash gap, so Ashkol Yitzur's cash balance was zero at both the beginning and end of the quarter. That is the key point: even in a quarter where operating cash flow exceeded EBITDA, no free cash accumulated at the Ashkol Yitzur layer. The money is still working inside the project rather than moving up to the company layer.

That gap changes what EBITDA means. It remains a useful measure of plant availability and operating contribution, but it does not answer the cash-access question by itself. In the current quarter, debt service alone, interest, lease principal, and loan repayment, totaled about NIS 127.4 million. That is almost identical to EBITDA of NIS 126.5 million. The NIS 70.1 million of CAPEX comes on top of that, so the analysis has to start with the cash uses rather than the operating headline.

The coverage ratios leave narrow headroom

Debt service coverage ratio, DSCR, is meant to test whether a project's cash flow is sufficient to service its debt. Ashkol Yitzur complies with the required ratios, but the two most sensitive numbers are close to the threshold: historical DSCR and minimum forecast DSCR were 1.09, against a requirement to stay above 1.05. Forecast DSCR was 1.25, average forecast DSCR was 1.39, and loan life coverage ratio was 1.37, so this is not a uniform picture of immediate pressure. Still, the minimum headroom is narrow enough to explain why Ashkol remains a problematic access layer.

The point is not whether Ashkol Yitzur is breaching a covenant. It is not. The point is how little room is left when the quarter also includes weaker electricity demand, temporary shutdowns in gas supply from Leviathan and Energean, purchases from Tamar at a higher gas price, limited diesel use, and an open request for recognition of a NIS 4.3 million cost gap. If the Electricity Authority does not cover that gap, or if the summer season and planned maintenance hurt availability, the ratio near the threshold can move quickly from a technical detail to a market pressure point.

This also sharpens the conclusion from the financing-layer continuation. At Dalia's bond level, ratios remain far from the thresholds. At the Ashkol Yitzur layer, the test is tighter because the debt, investments, and debt service sit inside the same company that produces the EBITDA. Looking only at Dalia on a consolidated basis misses the point where cash is actually filtered.

The equity-method layer shows where value stops

The equity-method investees note gives the accounting map of the problem. Ashkol Energies, Ashkol Yitzur, and Ashkol Avshal are held at 75% and are accounted for using the equity method. Dalia therefore does not present Ashkol Yitzur as though all of its revenue and cash flow are free cash of the parent company. It presents a share of results, and that share first passes through profit or loss, adjustments, financing limits, and the holding structure.

In the first quarter, Ashkol Yitzur recorded a loss of NIS 16.4 million despite operating profit of NIS 50.6 million, mainly because of NIS 72.3 million of net finance expenses. Dalia's share of Ashkol Yitzur's comprehensive loss was NIS 12.3 million. Alongside that, Ashkol Energies contributed NIS 2.6 million to Dalia in comprehensive profit recognized in the books, while Ashkol Avshal reduced results by NIS 9.7 million after eliminating intercompany gains. This is not cash movement, but it explains why Ashkol's EBITDA presentation is not enough to understand what reaches Dalia.

The land layer also carries financing. The investor presentation shows Ashkol Energies with an NIS 804 million bullet loan, at variable interest, with final maturity in December 2030. That layer is supposed to benefit from rent from Ashkol Yitzur, rent from Ashkol Avshal, and potentially future rent from a data center, but for now it is still a layer with its own debt. So even if Ashkol Yitzur and Ashkol Energies create economic value at the site, the path to accessible cash at Dalia runs through several filters: debt service, reserves, investment, distribution limits, and project timing.

What will decide the next read

The current conclusion is that Ashkol Yitzur works, but it is still not a free-cash layer for Dalia. The first quarter actually strengthens the distinction: strong operating cash flow is not enough when debt service and investments consume it in the same quarter, and a 1.09 DSCR leaves little room for another disruption. The read will improve if future reports show wider coverage headroom, consistent debt reduction, lower CAPEX pressure, and actual cash movement to Dalia through a dividend or owner-loan repayment. It will weaken if EBITDA remains high but cash keeps being absorbed by debt, investment, and Avshal. This matters because at Dalia, value that does not move up to the company layer is still paper value, not a source of flexibility for shareholders.