(Nov 13): Earlier this year, Malaysia’s Zetrix AI Bhd (KL:ZETRIX) was preparing to list its artificial intelligence unit on Nasdaq and had even built an AI avatar of Prime Minister Anwar Ibrahim. Now the onetime digital infrastructure star has lost more than 90% of its market value, is mired in debt and risks defaulting on its Islamic bonds.
Valued at RM10.5 billion (US$2.6 billion) at its peak in 2018, Zetrix’s market capitalisation has plunged to around RM430 million as the company that once held a near-monopoly on providing online state services struggles to diversify its business. Its grip on government contracts began loosening in 2023 as Malaysia shifted away from exclusive concessions to state-run services and competing platforms.
The company’s troubles deepened last month when authorities suspended its remaining online road tolls collection service after saying Zetrix owed the government RM314 million in Road Transport Department fees dating from May 19 to Sept 30.
“We are confident we will weather this,” founder Wong Thean Soon said in an emailed response to questions. “We take a long-term view and understand the market is adjusting to our transition from a primarily Malaysian government-focused business to a more international” one.
In its former guise as MyEG Services Bhd, the company oversaw government online services such as road tax renewals, traffic summons payments and foreign worker permits. As it began losing its exclusive rights to those services, it pivoted to AI and blockchain and started seeking new revenue abroad. It changed its name to Zetrix last year.
When the value of the company’s stock plunged, Wong was forced to sell 2.22 billion of his Zetrix shares between June and October to meet margin calls on his stock-based loans, ending his role as Zetrix’s largest shareholder. That put the company at risk of breaching its Islamic bonds covenant, which requires Wong to remain Zetrix’s biggest owner.
MARC Ratings subsequently cut the company’s debt score to one rung above default on the risk bondholders could declare a nonpayment. Zetrix, in a filing on Tuesday, said it owed RM25 million in bond payments due Nov 6.
Bursa Malaysia extended its deadline for Zetrix to disclose additional financial information from Wednesday to Nov 13. “The company will take the necessary steps to ensure compliance with the directive within the extended timeframe,” Zetrix said Wednesday.
The company’s immediate priorities are to fulfill its obligations and strengthen financial and operational positions, Wong said. Zetrix is banking on its domestic and foreign investments in AI and blockchain to generate new business, he said.
“We endeavor to exceed the previous all-time high because the blockchain and AI growth is still in its nascent stage,” he said of the company’s market value.
Meanwhile, the Anwar avatar that acts as a chatbot for queries from the public has also created complications. The service was indefinitely suspended just days after its July 19 launch when users forced the chatbot to make political statements, some of which were critical of the prime minister.
Wong said Zetrix is working with the premier’s team on new guardrails for the chatbot before reactivating it.
The founder acknowledged that recent developments are weighing on market confidence.
“The group is taking concrete actions and making responsible decisions to reinforce financial discipline, strengthen governance and ensure business continuity,” Wong said.
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