Digital World Acquisition Corp.A special-purpose acquirer that is planning to take former President Donald Trump’s media company public has scheduled a shareholder meeting for Tuesday as it seeks to extend the merger’s deadline by a year. .
Trump Media and Technology Corporation and SPAC have faced increased scrutiny in recent months. A federal investigation has been launched into possible securities violations than agreement. Fox Business reported that Truth Social is in financial difficulty and has failed to pay the supplier more than $1 million in contractually mandated payments, an allegation that the company has denied.
DWAC itself warned shareholders that a drop in the former chairman’s popularity could hurt the deal. Indeed, the vote comes amid a Justice Department criminal investigation into whether Trump Illegal removal of thousands of White House documentsincluding those marked “Top Secret” and “Classified”, to his Mar-a-Lago home after he left the presidency.
Truth Social has faced scrutiny of its own. The app has been banned from the Google Play store for violating the store’s policies on moderating user-generated content. The platform is still accessible online and on the Apple App Store.
DWAC and Trump Media face a deadline of Thursday to complete the merger, and SPAC is eagerly seeking an extension.
DWAC needs 65% of shareholders to approve the deferral. Patrick Orlando, CEO of DWAC, issued a series of pleas to shareholders through various channels, including Truth Social, urging them to approve the extension. A no vote is essentially counted as a “no” vote.
Several of SPAC’s institutional investors, including Lighthouse Investment Partners and Pentwater Capital Management, did not comment on the upcoming vote when reached by CNBC. Investment group Citadel said the company is holding shares as a “market maker”, not as a voting shareholder.
DWAC has previously warned that a “no” result could force DWAC to liquidate. SPACs, however, have built-in extensions of up to six months that can be taken by donors adding funds to the trust.
Orlando’s company, ARC Global Investments, holds 20% of these votes, he revealed in a statement interview last Thursday with IPO Edge. However, he said, “retail shareholders hold a lot of weight.”
Trump Media and Technology Group and Truth Social were formed after Trump was banned from using Twitter following the Capitol riots on January 6, 2021. On that day, his supporters stormed the building to stop it. blocking Joe Biden’s confirmation of victory in the 2020 presidential election.
Trump Media announced in October 2021 that it will merge with DWAC to take the company public. Trump Media, led by former US Representative Devin Nunes, said it also plans to roll out video streaming services TMTG News and TMTG+.
The high-profile nature of the merger has brought in more retail investors than SPACs typically attract. SPAC’s institutional investors largely did not respond to requests for comment.
For investors, a DWAC liquidation will pay out around $10 per share. Shares of the so-called blank check company were trading around $25 at the end of the year. This is far from the 2022 peak of around $97 in March. Weak shareholder turnout could break the deal.
“Let’s #rocktheproxy“, Florida-based Orlando said in one of his many Truth Social posts during the voting period. Shoot for mass participation and voter participation!!!! “
When asked about the probes in the DWAC-Trump Media deal, Orlando said that DWAC was “aware of many targets” prior to making the offer and that the company was complying with all probe requests.
Orlando said in an interview with IPO Edge: “If there’s an investigation, we’ll answer that question. If there’s a certain procedure that we have to take, we’ll do it. “.
DWAC CEO also said Trump is still president of Trump Media, countering reported that he left the board just weeks before the company was subpoenaed. Orlando reiterated the potential risks posed by Trump’s unsettled popularity.
“There’s an element of risk. We need to let people know these are the things you should be thinking about,” Orlando told IPO Edge. “If certain events go negative, they will negatively impact the stock.”
The results of the shareholder vote are expected to be announced on Tuesday, unless the company makes a decision to postpone the meeting.
– CNBC’s Yun Li contributed to this report.
