A SPAC set to take former President Donald Trump’s new media company public is facing another setback as it moves closer to liquidation.
What Happened: Less than a month after failing to get shareholder approval to extend the vote on the merger of Digital World Acquisition Corporation (NASDAQ:DWAC) and Trump Media & Technology Group, a new vote was delayed again.
A shareholder vote on Monday was adjourned after the SPAC failed to get the necessary 65% of shareholders to vote on an agreement to extend the merger deadline date to Sept. 9, 2023.
The new date for the merger vote extension has been set for Nov. 3, 2022.
Digital World Acquisition CEO Patrick Orlando used executive power to adjourn the meeting and delay the vote, something he has done several times.
The current deadline for the merger vote stands at Dec. 8, 2022, after the SPAC sponsors paid to extend the original vote deadline of Sept. 8, 2022, by three months. Under the terms of the original SPAC offering, the sponsors can pay to have one more three-month delay, which would make March 8, 2023, the ultimate deadline to complete the merger without the support of 65% of shareholders.
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Why It’s Important: News of the meeting being adjourned comes as a whistleblower filed a complaint to the SEC. Trump Media Senior Vice President William Wilkerson filed the complaint over securities violations.
Wilkerson said he believes the deal won’t go through and the company (Trump Media) faces major bankruptcy concerns.
Both the SPAC and associated merger partners have faced financial woes recently. There are also investigations by the SEC and a federal jury over the deal, which could delay the merger and ultimately lead to the deal not going through.
The SPAC merger also lost several investors involved in the PIPE (private investment in public equity) financing of the deal, after a key deadline passed.
Trump Media & Technology Group is the owner of Truth Social. This social media platform prides itself on free speech and has welcomed many people, including Trump, to the platform that were previously banned from platforms such as Twitter Inc (NYSE:TWTR).
Tesla Inc (NASDAQ:TSLA) CEO Elon Musk is in the process of acquiring Twitter and previously stated that he would reverse permanent bans, including that of Trump. A move could make Truth Social less valuable as many voices on the platform that were banned from Twitter had larger followings and could make a quick return to Twitter.
Trump hasn’t been too concerned about the SPAC merger falling apart.
“If they don’t come with the financing, I’ll have it private. Easy to have it private,” Trump said at an October rally.
Failure to close the deal by the December or extended March deadline will result in liquidation, valuing shares at around $10 net asset value.
“Digital World will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to the public stockholders,” a public filing said.
DWAC Price Action: Digital World shares are down 4.73% to $16.50 on Monday versus a 52-week range of $9.94 to $175.
Photo: Evan El-Amin via Shutterstock
