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Trump SPAC Faces New Investor Pressure as Digital World merger stalls in balance


The social media application will be developed by Trump Media and Technology Group (TMTG).

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Digital World Acquisition Corp., which plans to take Trump Technology and Media Corporation public, is facing investor concerns about a possible failed merger with former President Donald Trump’s company Trump.

The Financial Times reported Tuesday, DWAC CEO Patrick Orlando is in talks with investors, who say they will support the company through a private equity investment arrangement, aka. PIPE.

The $1 billion deal was set to expire on Tuesday. If it disbanded, that would mean a lot less money for Trump Media, even if it did eventually go public through a merger with DWAC. Orlando is pushing for an extension of 10 days, according to the newspaper.

PIPE investors are hoping to reduce the minimum conversion price for their preferred shares from $10 to as low as $2, the FT reported, citing a participant in the negotiations. That would boost their potential profits from the deal, even in the worst case scenario, as it would give investors more shares and dilute the shares of other shareholders. – including Trump’s.

The negotiation is an attempt to shift the risk to DWAC and Trump Media, which owns Truth Social. DWAC stock is currently trading at around $20, down significantly from its peak of $97 earlier this year, but still above its $10 liquidation price.

“Trump wants to make sure he doesn’t face too much dilution,” one person involved told the FT. “Optically, he wants to avoid the $2 floor. It looks weak and he doesn’t want to look weak.”

Representatives for DWAC and Trump Media did not immediately respond to requests for comment.

DWAC is a special purpose acquisition company, or SPAC, a publicly traded entity that takes pre-existing companies public. Orlando extended his merger with Trump Media beyond September 1 with a $2.8 million investment from his company, SPAC sponsor, ARC Global Investments II. DWAC is pushing shareholders through a one-year extension. The next shareholder meeting is set for next month.

If the merger deadline is not extended, DWAC has warned that the company may have to liquidate, returning shareholders about $10 per share, the original share price for a SPAC.

Trump founded the Trump Media and Technology Corporation and its platform Truth Social after he was banned from Twitter following the Capitol riots on January 6, 2021. The former president is facing many challenges. The investigation involves an attempt to overturn the 2020 presidential election and the removal of sensitive documents from the White House. Trump Media’s planned merger with DWAC is the subject of federal investigations into potential securities violations.

After exploding in 2020 and 2021, SPACs have largely dried up. “SPAC King” Chamath Palihapitiya let two of his white check companies dissolve Third when their term passes without renewal.

Orlando, CEO of DWAC, saw one of his SPACs will be liquidated in 2021. He has until December to stop Digital World Acquisition Corp. met the same fate.



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