Former president Donald Trump’s Truth Social has stalled in its ambition to go public after the blank-check acquisition firm that agreed to a merger to take Truth public failed to get enough shareholder support for a one-year extension to close the deal.
In an exclusive report from Reuters, Trump Media & Technology Group, which manages Truth Social, may not receive a $1.3 billion cash infusion from Digital World Acquisition Corp (DWAC.O), the special purpose acquisition company (SPAC) that signed the deal last October to take TMTG public.
The deal has also faced civil and criminal questions, as Digital World awaits an approval from the U.S. Securities and Exchange Commission (SEC), which has the transaction under review. Reuters cited Digital World Chief Executive Patrick Orlando, who said that the majority of Digital World’s shareholders, who are individual investors, have been reluctant to vote through their brokers.
As of Monday morning, fewer than the 65% of Digital World’s shareholders have voted in favor of the proposal to extend its life by 12 months. The results of the vote will be announced in a Digital World shareholder meeting Tuesday. Executives do not have confidence in a majority vote in time, so they have begun to look at other solutions.
One option would be to postpone the vote deadline to allow more time to raise shareholder support. If no further action is taken, the SPAC has a liquidation deadline of Thursday, Sept. 8, meaning it would return the money it raised in its September 2021 initial public offering.
If the vote required to secure a one-year extension is not met, Digital World’s management could extend its life without shareholder approval by, at most, six months. Regulators seek Digital World documents on due diligence of potential targets other than TMTG, Digital World relationships with other entities, trading policies and procedures, as well as the identification of certain investors.
A completion of the deal would result in TMTG receiving $293 million from Digital World in addition to $1 billion committed from a group of investors in the form of a private investment in public equity (PIPE).
Donald Trump’s Truth Social app launched in February 2022, with the former president starting to use it two months later, gaining over 4 million followers. He had 89 million followers on Twitter before he was banned in the aftermath of the Jan. 6 insurrection on the Capitol.
