Zetrix AI misses D-Day on RM2bil sukuk breach, default risk looms

KUALA LUMPUR: Zetrix AI Bhd seems to have missed Thursday's deadline to resolve a covenant breach under its RM2 billion sukuk programme.

As of press time, Zetrix AI had not issued any statement on whether it had secured a waiver from sukukholders or reached an agreement with the sukuk trustee.

Without a resolution, the digital services and blockchain group faces potential repayment obligations of RM2.16 billion, comprising RM2 billion in principal and RM164.5 million in future coupon payments.

The breach arose after managing director Wong Thean Soon ceased to be the company's single largest shareholder following a series of forced share sales linked to margin calls on his share-backed financing facilities.

His combined direct and indirect shareholding fell from nearly 30 per cent to 1.895 per cent as at Oct 15, triggering a breach of the sukuk covenant requiring him to remain the company's largest shareholder.

As at the time of writing, Wong had not responded to Business Times for comment.

In its earlier filing with Bursa Malaysia, Zetrix AI said it would seek sukukholders' consent through an extraordinary resolution, including a possible waiver, if the breach remained unresolved by Oct 22.

Without a waiver, a dissolution event could be triggered, allowing the sukuk trustee to accelerate repayment of outstanding amounts.

However, the missed deadline does not in itself confirm that the trustee has demanded immediate repayment or that a payment default has occurred.

The development adds to pressure on the group, which recently withdrew its proposed interim dividend of 0.25 sen a share, citing the need to preserve working capital amid unexpected operational expenses.

Zetrix AI is also facing scrutiny over RM314 million in unremitted collections owed to the Road Transport Department.

MARC Ratings, meanwhile, has downgraded its sukuk rating to BB+IS from AA-IS and maintained a negative outlook, citing deterioration in its financial and liquidity position, governance concerns and heightened covenant risks.

The company's next move, and whether sukukholders will grant a waiver, remain key uncertainties for investors.