Zetrix AI's RM2bil sukuk rating slashed to near-default category
KUALA LUMPUR: MARC Ratings has slashed its rating on Zetrix AI Bhd’s RM2 billion Islamic medium-term notes to CIS from BB+IS, citing an unresolved covenant breach, mounting financial claims and worsening governance concerns.
KUALA LUMPUR: Credit rating agency MARC Ratings has downgraded Zetrix AI Bhd's RM2 billion Islamic medium-term notes to CIS, a near-default category, due to unresolved covenant breaches, increasing financial claims, and growing governance concerns. The reduction mirrors a prior downgrade on October 16, when MARC decreased the rating to BB+IS from AA-IS.
The latest downgrade underscores persistent uncertainty surrounding Zetrix AI's adherence to a covenant requiring founder Wong Thean Soon to remain the company's largest shareholder. A shareholder meeting on October 23 concluded without resolving this covenant breach, leaving the sukuk vulnerable to default declaration. Although a dissolution event has been initiated, it doesn't necessitate immediate repayment of the outstanding sukuk.
MARC also noted mounting liquidity pressures on the group amidst mounting financial claims. The Malaysian government is reportedly pursuing legal action for RM314 million in revenue allegedly collected on Zetrix AI's behalf but not remitted. Zetrix AI claims to have yet received official notification from the government. Additionally, its wholly-owned subsidiary MY EG Sdn Bhd faces a further RM353.1 million income tax assessment from the Inland Revenue Board, which the group has appealed.
MARC highlighted liquidity uncertainties related to Zetrix AI's digital assets, which could impact its funding capacity. Governance weaknesses have further fueled concerns, including the absence of new external auditors and resigned members of the audit committee. Without external auditors and an audit committee, financial reporting oversight is compromised, casting doubt on the reliability and timeliness of disclosures.
MARC will continue monitoring developments, including engagement with sukukholders and appointments to the audit committee and external auditor positions. Failure to meet any financial obligations on time would result in a downgrade to DIS, signifying a default rating.
Written by urgent.news from New Straits Times's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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