Digital World Acquisition Corp., the special purpose acquisition company that plans to take former President Donald Trump’s media company public, has scheduled a shareholder meeting for Tuesday as it seeks to extend the merger deadline by up to a year.
Trump Media and Technology Group, as well as the SPAC, have come under increased scrutiny in recent months. A federal investigation into possible securities violations in connection with the transaction has been launched. According to Fox Business, Truth Social was in financial trouble and had failed to pay a vendor over $1 million in contractually obligated payments, which the company denied.
DWAC warned shareholders that a drop in the ex-popularity president’s could jeopardize the deal.
Indeed, the vote comes amid a Justice Department criminal investigation into whether Trump illegally removed thousands of White House documents, including those labeled “Top Secret” and “Classified,” to his private Mar-a-Lago estate after leaving office.
Truth Social has been scrutinized. The app was removed from the Google Play store for violating the store’s policies on user-generated content moderation. The platform is still available online and in the Apple App Store.
The merger between DWAC and Trump Media is set to close on Thursday, and the SPAC is hoping for an extension.
The delay must be approved by 65% of DWAC shareholders. Patrick Orlando, the CEO of DWAC, has urged shareholders to approve the extension through various channels, including Truth Social. Non-votes are effectively interpreted as “no” votes.
When CNBC reached out to some of the SPACs’ institutional investors, including Lighthouse Investment Partners and Pentwater Capital Management, they declined to comment on the upcoming vote. Citadel Investment Group stated that it is holding stock as a “market maker” rather than as a voting shareholder.
DWAC has previously warned that a “no” vote could force the company into liquidation. The SPAC, on the other hand, has built-in extensions of up to six months that can be initiated by sponsors contributing funds to the trust.
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Orlando’s company, ARC Global Investments, owns 20% of these votes, he revealed in an interview with IPO Edge last Thursday. Nonetheless, he stated, “the retail shareholder carries a lot of weight.”
Trump Media and Technology Group and Truth Social were formed after Trump was banned from Twitter following the Capitol riot on January 6, 2021. On that day, his supporters stormed the building in an attempt to prevent Joe Biden’s victory in the 2020 presidential election from being certified.
In October 2021, Trump Media announced a merger with DWAC in order to go public. Trump Media, led by Republican former U.S. Representative Devin Nunes, has also announced plans to launch TMTG News and TMTG+ video streaming services.
The high-profile nature of the merger attracted more retail investors than SPACs typically do. Institutional investors in SPACs did not respond to a request for comment.
The liquidation of DWAC would pay out around $10 per share to investors. Shares of the so-called blank check company have recently traded around $25. This is a long way from its March 2022 peak of around $97. A low turnout in the shareholder vote could derail the transaction.
“Let’s #rocktheproxy,” Orlando, who lives in Florida, said in one of his many Truth Social posts during the voting period. “I’m hoping for a lot of engagement and voter participation!!!!”
When asked about the DWAC-Trump Media deal probes, Orlando stated that DWAC was “aware of many targets” prior to the offering and that the company was complying with all probe requests.
“If there is an inquiry, we respond to it.” “If there’s a procedure that we have to follow, we follow it,” Orlando said in an interview with IPO Edge.
The DWAC CEO also stated that Trump remained chairman of Trump Media, despite reports that he had left the board just weeks before the company was subpoenaed. Orlando emphasized the risks posed by Trump’s volatile public popularity.
“There is some risk involved.” We need to let people know these are things you should think about,” Orlando told IPO Edge. “If certain negative events occur, they will have a negative impact on a stock.”
The results of the shareholder vote are expected to be announced on Tuesday, unless the company decides to adjourn the meeting.