Zetrix AI shares surge 30pct ahead of crucial sukukholders' meeting

KUALA LUMPUR: Shares of beleaguered Zetrix AI Bhd rebounded 30 per cent in early trade today, ahead of a crucial meeting with sukukholders that could determine how the company resolves a covenant breach involving its RM2 billion sukuk programme.

The counter topped Bursa Malaysia's most active list as it climbed 1.5 sen to 6.5 sen, with 62.96 million shares changing hands as at 9.44am. It opened half a sen or 10 per cent higher at 5.5 sen.

The stock has seen months of heavy selling driven by forced share disposals involving its managing director, financial and governance concerns, and a sharp credit rating downgrade.

The latest crisis centres on a breach of a key covenant under its RM2 billion Sukuk Wakalah programme, which requires managing director Wong Thean Soon to remain the company's single largest shareholder.

Forced share sales by banks reduced Wong's combined direct and indirect stake to just 1.895 per cent as at Oct 15, putting the company in breach of the requirement.

Zetrix AI has lost about 92 per cent of its value since the start of the year, when its shares traded at 81 sen.

At 6.5 sen, the company had a market capitalisation of about RM525.11 million.

In a filing with Bursa Malaysia on Thursday, Zetrix AI said sukuk trustee Pacific Trustee Bhd would convene a meeting with sukukholders today to discuss a proposed resolution to address the breach.

The company confirmed that no payment default had occurred as at Thursday.

"The meeting aims to facilitate constructive discussions and gather feedback from the sukuk holders on the proposed resolution," it said.

Zetrix AI said the discussions would form the basis for an arrangement mutually acceptable to the relevant parties.

The meeting follows the expiry of the company's Oct 22 deadline to remedy the covenant breach.

Under the sukuk terms, failure to secure an acceptable resolution could trigger a dissolution event, potentially allowing the trustee to demand immediate repayment of outstanding amounts.

Zetrix AI has RM2 billion in outstanding sukuk principal and RM164.5 million in future coupon payments.

The company's financial troubles deepened last week when MARC Ratings slashed its sukuk rating to BB+IS from AA-IS, while maintaining its MARCWatch Negative status.

The downgrade reflected deteriorating financial and liquidity conditions, heightened governance and shareholding uncertainties, and increased risks surrounding compliance with its sukuk covenants.

Adding to investor concerns, Zetrix AI on Monday withdrew its previously declared interim dividend of 0.25 sen per share, citing unexpected operational expenses and the need to preserve working capital.

The company said it remained committed to meeting its sukuk repayment obligations according to the agreed schedule and would continue engaging with the trustee to resolve the matter.