Zetrix AI given until Oct 22 to fix potential sukuk covenant breach

Zetrix AI Bhd has until Oct 22 to remedy a potential breach of its sukuk terms after founder and executive vice-chairman Wong Thean Soon ceased to be the company’s single largest shareholder following the forced sale of his shares by banks.

In a bourse filing today, Zetrix said Wong’s combined direct and indirect shareholding in the company stood at 1.895% as at yesterday, meaning he was no longer the single largest shareholder.

“Pursuant to the terms of the Sukuk Wakalah programme, the company is required to remedy the aforesaid breach within seven days of becoming aware of the matter. Accordingly, the company is required to remedy the aforesaid breach by Oct 22,” it said.

Zetrix said if it failed to remedy the breach of deadline, the consent and instructions or direction of the sukukholders would be sought via an extraordinary resolution of sukukholders.

The firm also said it was in discussions with the sukuk trustee in relation to the aforesaid matter and would make further announcements on any material developments when appropriate.

In July last year, the company expanded its Sukuk Wakalah programme to RM2 billion in nominal value, up from RM1 billion.

According to The Edge, rating agency MARC Ratings Bhd placed the Islamic bonds on MARC Watch Developing, amid concerns about a substantial reduction in Wong’s shareholding.

Wong’s shareholding dropped from 29.25% in early April to 10.6%, triggered by margin calls after Zetrix’s share price dived.

MARC’s report stated that one of the terms of the Sukuk Wakalah programme required Wong, as a key shareholder, not to sell, transfer or otherwise dispose of his stake in a way that would result in him ceasing to be the single largest shareholder, directly or indirectly, without the consent of the sukukholders.

The sukuk programme saw its first tranche of RM100 million issued on Nov 21, 2022, with a five-year tenure ending on Nov 19, 2027. This was followed by a RM50 million tranche on Nov 28, 2022, maturing on Nov 26, 2027, and another RM100 million tranche on Jan 17, 2023, which falls due on Jan 17, 2028.

Zetrix will therefore need to redeem RM250 million in sukuk between November 2027 and January 2028. Any default on the sukuk could trigger a Practice Note 17 or PN17 classification.

The road transport department suspended MyEG and Zetrix, previously MyEG Services Bhd, as its collection agents for fees and summonses after it was revealed that they owed the department hundreds of millions in arrears since May.

Yesterday, Zetrix said it would fully cooperate with the authorities in the ongoing joint investigation by the police and the Malaysian Anti-Corruption Commission following the alleged failure to transfer RM230.9 million in collected government revenue.

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