The company that intends to take Trump Media and Technology Group and its Truth Social platform public has said that shareholders voted to postpone be a number of months a deadline for its merger with the former president’s firm.
Following a brief shareholder meeting to announce the delay, Digital World Acquisition Corp. shares closed more than 5% higher. If DWAC did not receive a deadline extension, it faced liquidation next month, though the merger faces additional legal and financial challenges. The Securities and Exchange Commission, as well as federal criminal investigators, are looking into the Trump Media-DWAC deal.
The company, which hasn’t generated any revenue and already has $1 billion in financing at risk, had postponed the meeting several times in recent months as it sought shareholder support. DWAC required 65% of its shareholders to approve a delay in the merger with Trump Media until September 2023. DWAC stated in a securities filing on Monday that it has “substantial doubt” about its ability to continue as a “going concern.”
DWAC has previously failed to obtain the required number of votes from its large group of retail investors. The meeting was repeatedly adjourned. With a $2.8 million contribution from his company Arc Global Investments II, DWAC CEO Patrick Orlando initiated a built-in extension.
“It’s a really arduous process when you have as many stockholders as we did,” Orlando said during an interview with IPO Edge on Tuesday immediately prior to the shareholder meeting.
Orlando has been urging Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to help publicize the effort on Trump Media’s Truth Social platform.
The stakes were especially high for some of the former president’s supporters, who revealed on Truth Social and Reddit that they had invested thousands of dollars in DWAC as a show of support for the platform.
If a merger occurs, Trump Media would receive hundreds of millions of dollars in funding. It has already encountered a number of legal and financial challenges.
The transaction has been the subject of a criminal investigation, and the delay has resulted in a loss of over $100 million in investment.
The former president previously stated that he was considering taking the company private. According to internal documents, Trump Media considered mergers and partnerships with other right-wing-friendly platforms such as Rumble and Parler.
Elon Musk, the new owner of Twitter, reinstated Trump on the social media platform over the weekend. Following the Jan. 6, 2021, insurgency at the United States Capitol, where hundreds of his supporters rioted and disrupted lawmakers who were formally counting Electoral College votes, Twitter banned Trump. Since his reinstatement, the former president has yet to tweet.
“I would expect Truth [Social] to be the main platform for the president’s tweets, or, his truths,” Orlando said during the fireside chat Tuesday. “At Digital World, we don’t actually control anything to do with Truth and its users at this point. But we’re watching it, and we really like what we see with user engagement.”
The special purpose acquisition vehicle has also been dealing with the fallout from a whistleblower complaint filed by a Trump Media executive with federal regulators. In August, William Wilkerson, a senior vice president at Trump Media, filed a whistleblower complaint alleging securities fraud. Wilkerson, one of the company’s founders, has stated that he no longer believes in its viability.
In September, the company disclosed that it had lost $138.5 million of the $1 billion in financing provided by private investors in public equity, or PIPE, to fund the merger. DWAC’s mailing address was changed to a UPS Store in Miami the same month.
According to a securities filing, DWAC recently lost one of its board members when Justin Shaner, CEO of Shaner Properties in South Florida, resigned.
(Adapted from TheHill.com)