Donald Trump’s beleaguered social media company is facing further financial turmoil after a long-awaited $1.3bn cash injection looks set to be derailed due to lackluster investor backing.
Shareholders of the special purpose acquisitions firm, which last year brokered a deal to take the Trump Media and Technology Group public, have not backed a one-year extension to complete the transaction, which threatens to spoil the merger.
Trump Media and Technology Group is the company that launched the ex-president’s Truth Social platform.
The $1.3bn cash infusion from Digital World Acquisition Corp has been on hold since last October due to civil and criminal investigations into the circumstances around the merger. The Nasdaq-listed acquisitions company requires the support of 65% of shareholders, who are mostly individual investors, for the extension it needs to try to secure the deal.
The outcome of the vote will be announced at a special shareholders meeting on Tuesday, when it is likely to be more bad news for the former president. Digital World executives do not believe they will be able to muster enough shareholder support in time and have started to consider alternative options, Reuters reported.
Options include a unilateral six-month extension against the wishes of shareholders, and another is extending the final vote deadline to attempt mustering up more support in hopes that the Financial Regulatory Authority and US Securities and Exchange Commission (SEC) will soon give the green light for the deal to proceed.
If Digital World fails to come up with a stopgap solution before Tuesday’s shareholder meeting, it will be forced to liquidate its shares and return the money it raised in its initial public offering.
Digital World, a so-called blank check company created specifically for the purpose of acquiring or merging with an existing business, has previously said that Trump’s media group has “sufficient funds” until April 2023.
Trump leveraged his vast social media following throughout his presidency to fire up his base, rile opponents and hire and fire staff – a modus operandi which eventually led to his banishment from the most popular platforms.
Trump has more than 4 million followers on Truth Social, where has been posting since April, which is just a fraction of the 89 million he had on Twitter. Twitter and Facebook banned Trump after his supporters staged the deadly January 2021 attack on the US Capitol in a desperate attempt to prevent the congressional certification of his defeat to Joe Biden in the previous year’s election.
The app is currently available to download on Apple’s app store, and it was recently banned from Google Play where the vast majority of apps are downloaded for Android users. Google said the platform violates its policies on banning content that involves physical threats and could incite violence.
It is unclear how Trump’s media company has been operating without access to Digital World’s funding, but last week it said that Truth Social is “on strong financial footing” and would soon begin running advertisements.
Reuters contributed to this report
