The merger that would have made Donald Trump's social media venture into a publicly traded company is collapsing, according to a report. People familiar with the matter told the outlet that shareholders rejected a one-year extension.
There is a pending deal between Trump Media & Technology Group and Digital World Acquisition Corp.
The merger has been chaotic since it was first announced. The SEC, Department of Justice, and a federal grand jury are investigating the acquisition of DWAC.
The timing of merger discussions and Digital Worlds going public seem to be the focus of the investigations. Special acquisition agreements are not allowed before a company goes public.
The investigations are unrelated to the ongoing investigations into Trump himself, who may have been removed from the company's board.
DWAC was created as a shell company with the sole purpose of funding TMTG and bringing it to the stock market while skirting around regulatory hurdles. Truth Social would become the main asset of the acquisition company if DWAC is absorbed.
The DWAC filed a proposal to extend the final deal deadline by one year. All company shareholders need to offer their affirmative support by today in order to approve the extension. According to the outlet's unnamed sources, "far fewer Digital World shareholders than those required had voted in favor"
DWAC is set to go out of business on Thursday without shareholder support. Truth Social could be facing even more financial challenges due to the fact that the shell company will have to return the money it raised.
The DWAC filed a SEC filing.
Without the Extension, the Board believes that there is significant risk that we might not, despite our best efforts, be able to complete the Business Combination on or before the Termination Date. If that were to occur, we would be precluded from completing the Business Combination and would be forced to liquidate even if our stockholders are otherwise in favor of consummating the Business Combination.
Digital World's executives are looking at other options. The company could try to get more people to vote in favor of the extension. A six-month extension is possible without shareholder support.
It might not be enough to keep DWAC afloat. The platform has gotten a recent boost in users, but still seems to be in dire financial straits. This is from the news agency.
It is unclear how TMTG is getting by without having access to Digital World’s funding. It raised $22.6 million through convertible promissory notes last year and an additional $15.4 million through bridge financing in the first quarter of this year. The agreement with Digital World caps the indebtedness that TMTG can assume prior to the deal closing at $50 million.
Digital World has said it believes TMTG will have “sufficient funds” until April 2023. TMTG said last week that Truth Social is “on strong financial footing” and would begin running advertisements soon.
Truth and TMTG could eventually follow Digital World's demise. It would be a good thing for the internet to be less filled with lies and conspiracy. Without Trump's personal platform, where will he post incriminating statements about espionage?
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