Trump Spac’s shareholders give it more time to clinch a deal
Executives behind a blank-cheque company that plans to take Donald Trump’s media business public will have until next September to complete the deal after shareholders finally approved a motion to extend that deadline even as they face scrutiny from federal prosecutors.
Shares in Digital World Acquisition Corporation, the special purpose acquisition company run by Patrick Orlando, were up more than 9 per cent following the announcement on Tuesday. The Miami-based businessman, who stands to make hundreds of millions of dollars if the deal is completed, has been working for months to get shareholders to approve the extension.
DWAC will now have until September 8 to complete the deal with Trump Media & Technology Group.
However, the deal with TMTG still faces significant hurdles that include investigations by the Securities and Exchange Commission and federal prosecutors as well as a whistleblower complaint that alleges the companies violated securities laws.
US authorities have not spoken publicly about their investigations, and no person or company has been accused of any wrongdoing in connection with the Trump deal.
The Spac has spent heavily to get its investors, most of whom are retail investors, to vote in favour of granting the company extra time to win shareholder approval for the deal. DWAC spent more than $11mn in the nine months to September on “formation and operations costs” versus just $161,297 last year, according to regulatory filings.
The spending underscores the heavy financial burden of keeping the much-delayed deal alive.
If successful, the transaction will result in a public listing for TMTG and proceeds of more than $1bn to pursue its agenda of “cancelling cancel culture” and “standing up to big tech”. It is uncertain whether the company still stands to receive this sum as its so-called pipe investors, short for “private investment in public equity”, have the right to withdraw from the deal with no penalty, according to multiple sources briefed on the matter.
Investors who had committed $138.5mn to the private placement redeemed their cash in late September. Some who remain are looking to negotiate far more advantageous terms if they were to proceed, the FT has reported.
The future of TMTG relies heavily on Donald Trump, who recently announced he plans to run for president again in 2024. The former president’s Twitter account was recently reinstated by the company’s new billionaire owner, Elon Musk, although Trump has said he intends to remain on his own social media platform, Truth Social.