Zetrix AI Bhd, the prominent Malaysian artificial intelligence and blockchain enterprise, is racing against a tight deadline to resolve a potential covenant breach tied to its RM2 billion Sukuk Wakalah programme. The crisis was triggered after the company’s founder and managing director, Wong Thean Soon, saw his equity stake severely depleted following forced selling by banks, stripping him of his position as the single largest shareholder.
According to regulatory filings submitted to Bursa Malaysia, Zetrix AI was handed a narrow window to address the compliance issue. The company must remedy the potential breach by October 22, 2026. If the situation remains unresolved and sukuk holders refuse to grant a waiver, the company could face severe financial consequences, including the accelerated repayment of its outstanding debt obligations.
The sudden developments have sent shockwaves through the market, resulting in a temporary trading halt of the company’s shares, a sharp decline in its stock price, and heightened scrutiny from rating agencies regarding its rapid expansion and debt-fueled growth model.
What the Covenant Requires
The Sukuk Wakalah programme, which dates back to November 2022, includes specific provisions designed to ensure stability in the company’s leadership and ownership structure. Among these terms is a critical key-shareholder condition.
Under the terms of the Islamic medium-term notes programme, the issuer is strictly required to ensure that Wong Thean Soon does not sell, transfer, or otherwise dispose of his shares in a manner that terminates his status as the single largest shareholder of the company without obtaining prior formal consent from the sukuk holders.
In its official filing with Bursa Malaysia, the company acknowledged the gravity of the situation, stating that it is considered to be in potential breach of the covenant because Wong no longer satisfies the direct or indirect requirement of remaining the single largest shareholder.
How the Stake Fell
The erosion of Wong’s equity stake unfolded over several weeks, heavily driven by financial market pressures. In September, MARC Ratings issued a report noting that Wong’s shareholding had dropped significantly to 12.1 percent—comprising 6.5 percent held directly and 5.6 percent held indirectly—down from a previous level of 30 percent. Analysts pointed out that the steep decline was largely triggered by margin calls. At the time, the rating agency warned that any further reduction in his shareholding could breach the strict covenants governing the sukuk programme.
Those warnings materialized rapidly. By October 15, forced sales executed by lending banks further slashed Wong’s holdings. According to corporate disclosures, his combined direct and indirect stake plummeted to just 1.895 percent, effectively ending his reign as the company’s dominant shareholder and instantly tripping the trigger for the potential debt covenant violation.
What Happens Next
The immediate focus for Zetrix AI centers on the strict timeline imposed by the governing documentation. The company was given a seven-day window from the disclosure date to resolve the potential breach, setting a hard deadline of October 22, 2026.
Industry observers note that the company has a few potential paths forward. One option involves negotiating directly with the sukuk trustee to find a mutually acceptable resolution, while another alternative requires seeking formal consent from sukuk holders through an extraordinary resolution to secure a waiver.
Financial analysts warn that the stakes are exceptionally high. If the breach is not successfully remedied by the October deadline and a formal waiver is not secured, Zetrix AI could face an accelerated repayment demand. This could force the company to immediately settle an estimated RM2 billion in outstanding principal alongside roughly RM164.5 million in future coupon obligations, with various media reports placing the total potential liability at approximately RM2.16 billion.
In response to these developments, Zetrix AI has confirmed that it is actively engaged in discussions with the sukuk trustee to address the matter. The company has pledged to provide further updates to the market as material developments occur, though no definitive outcome from the talks had been announced.
Rating Watch and Balance Sheet
The unfolding governance and equity crisis compounds broader financial pressures already being monitored by credit rating agencies. In September, MARC Ratings initially placed the AA-IS rating assigned to Zetrix AI’s Islamic Medium-Term Notes programme on MARCWatch Developing. As the situation deteriorated, the rating agency subsequently revised the watch status to negative.
MARC highlighted a sharp escalation in the company’s financial leverage. Zetrix AI’s total borrowings climbed to RM2.2 billion as of the end of June 2026, a dramatic increase from just RM160.5 million in 2021. This capital has been heavily channeled into aggressive development spending aimed at scaling up the company’s artificial intelligence and blockchain platform services.
Financial reports indicate that the company accumulated cumulative development expenditures reaching RM3.7 billion—accounting for approximately 56 percent of its total assets—even as it posted a net profit of RM540 million for the first half of 2026. Zetrix AI has previously gained industry attention for rolling out major technological initiatives, including partnerships to develop AI systems for government and religious administrative frameworks.
Operational headwinds have further complicated the corporate landscape. Reports indicate that Zetrix AI and its affiliate MyEG faced temporary suspensions as Road Transport Department collection agents, accompanied by notable outstanding remittance figures.
Market Reaction
The combination of the regulatory filing, the potential debt covenant breach, and the sharp drop in the founder’s shareholding provoked an immediate and volatile response from investors on the stock exchange.
Trading in Zetrix AI shares was halted briefly in the morning session following the disclosure. When trading resumed, heavy selling pressure materialized immediately. The stock tumbled sharply as hundreds of millions of units changed hands. By the closing bell, the company’s share price had retreated significantly from its previous levels, marking a steep percentage loss on the day and extending a severe downward trajectory from earlier in the year when the stock touched much higher peaks. The sharp sell-off left the company with a substantially reduced market capitalization.
With the market digesting the fallout, attention remains fixed on the fast-approaching October 22 deadline. Market participants and creditors alike are closely watching for any official updates regarding the ongoing discussions between Zetrix AI’s management and the sukuk trustee, as well as any formal moves to seek relief from sukuk holders.
Frequently Asked Questions
What is a key shareholder covenant in a sukuk?
A key shareholder covenant is a contractual provision within debt financing documents that legally binds the issuer to the ownership position of a specific individual. In the case of Zetrix AI’s Sukuk Wakalah programme, the terms mandate that founder Wong Thean Soon must remain, directly or indirectly, the single largest shareholder. Any share disposal that alters this status requires formal consent from the sukuk holders.
What happens if Zetrix AI misses the Oct 22 deadline?
If the company fails to remedy the covenant breach and is unable to secure a formal waiver from sukuk holders, it could be subjected to accelerated repayment terms. This would require the immediate settlement of outstanding principal amounts alongside future coupon obligations, significantly straining the company’s liquidity.
Who is Wong Thean Soon and why does his stake matter to the sukuk?
Wong Thean Soon serves as the co-founder and managing director of Zetrix AI. His equity stake is central to the sukuk programme because the debt covenants explicitly tie the validity of the financing terms to his continued status as the company’s single largest shareholder. His recent drop in ownership—largely forced by margin calls—directly triggered the compliance issue.
What did MARC Ratings do to Zetrix AI’s rating?
MARC Ratings initially placed the AA-IS rating on Zetrix AI’s Islamic Medium-Term Notes programme on MARCWatch Developing in September. Following further developments regarding the founder’s dwindling share stake and rising corporate borrowings, the rating agency revised the watch status to negative.
Has Zetrix AI defaulted on its sukuk?
The company has not formally defaulted. In its regulatory disclosures, Zetrix AI classified the situation as a "potential breach" and emphasized that it is actively engaged in discussions with the sukuk trustee. Accelerated repayment remains a risk contingent upon the failure to resolve the breach or secure a waiver by the specified deadline rather than an event that has already occurred.