Mirland-S After Series H: Series I Dilution Pushes the Equity Into the Residual

Mirland-S is no longer judged only by whether Series H is repaid in October. That repayment is just the first layer, and the numbers around Series I explain why the common equity remains junior even if the company succeeds in moving cash out of Russia. The recovery table puts Series H ahead of every other layer, and assigns Series I a recovery of only 10.5 agorot per NIS 1 par value in the scenario where Series H is repaid in full. At the same time, Series I has a fair value of $1.294 million against a $19.820 million book value, while the capital note is shown with zero fair value. The sharper point for shareholders is the next mechanism: the forced-conversion conditions for Series I are already met, and through the end of 2026 the company may force a full conversion into shares representing up to 95% of the company on a fully diluted basis. A successful Series H repayment therefore does not automatically flow through to common shareholders. It may first open the stage where Series I determines how much of the residual becomes equity, and at what dilution cost.

The Recovery Waterfall Puts Series H First

The number that organizes the capital structure is not the Russian real-estate value by itself. It is the order of distribution among the securities created under the 2021 arrangement. The expected-recovery table lists three payments already made or expected around Series H: a NIS 20 million early repayment of Series G, a NIS 16.2 million first Series H payment, and another NIS 13.262 million partial Series H payment. The central future line is an expected NIS 60.538 million payment to Series H.

After those items, the table does not show a cash repayment for Series I. It adds the important recovery sentence: holders of the new securities reach 41.7 agorot per NIS 1 par value when Series H is repaid in full and Series I receives 10.5 agorot per NIS 1 par value. This is not a theoretical asset-value exercise. It is a priority order that leaves little room for the layers behind Series H.

The caveat that follows makes the recovery tighter, not looser. The scenario assumes the company can sell Russian real-estate assets and move the proceeds outside Russia. If that does not happen, the company says it will not be able to pay securities holders beyond the cash amounts held in Israeli trust accounts. In other words, even the positive base case does not create a clear surplus for common shareholders, while the downside case brings everyone back to very limited cash.

Series I Is Priced Like an Option on the Residual

The fair-value gap shows how far the market is from treating Series I as ordinary debt approaching repayment. Series H is shown at a $12.605 million fair value against an $18.827 million book value. Series I is much further away: $1.294 million of fair value against a $19.820 million book value. The capital note, an even more junior layer, is shown with zero fair value against a $1.176 million book value.

That gap matters because it narrows the interpretation range around the stock. If Series I itself is valued in the market at a small fraction of its accounting balance, it is hard to argue that the common equity directly benefits from the accounting value of the assets. It benefits only if three things happen together: Series H is repaid, Series I receives a solution that does not absorb most of the residual, and the Russian disposal proceeds reach the parent without delay or blockage.

The Forced Conversion Is Not a Footnote

The mechanism that sharpens the common-shareholder risk is Series I's forced-conversion right. The company may, on any trading day until December 31, 2026, force Series I holders to convert all outstanding principal and interest into ordinary shares representing up to 95% of the company on a fully diluted basis, if two conditions are met.

Both conditions are met as of the report date. The first condition tests the value of Western Residence, the remaining Triumph Park assets and unrestricted cash at Triumph Park, after required adjustments. The amount is $5.889 million, below the $7 million threshold. The second condition tests the company's solo cash, which is $186 thousand, far below the $5 million threshold.

Series I therefore changes role. It is not only a junior debt instrument waiting to see what remains after Series H. It is also an instrument that can become near-total ownership if the company activates the mechanism. The fact that no holder conversion notices were received from the start of 2026 does not change the company's right. Common shareholders are exposed not only to whether value remains, but to who owns that value after conversion.

The maintenance list reinforces the same point from a market-access angle. The company's shares and Series I have been on the TASE maintenance list since February 12, 2023 because public holdings were below NIS 5 million, and the company believes its options for exiting that list are limited and not practical. A tiny-market-value share with this dilution path and the risk of delisting if it does not return to the main list within 48 months cannot be valued only through accounting NAV.

What Remains After October Will Set the Read

The current read of Mirland's capital structure is negative for common shareholders even without assuming a full failure of asset disposals. Series H gets the first cash, Series I is valued and described as a recovery layer far below book value, and the forced-conversion conditions already give the company a tool that can dilute shareholders almost to the limit. The counter-thesis is that fast disposals and successful cash extraction from Russia could leave a better residual than the market currently prices. The next proof point is not another quarter of rental revenue. It is a filing showing actual Series H repayment, cash reaching the solo level outside Russia, and a clear decision on Series I before the 2026 conversion window closes.