The IPO of Donald Trump’s newly founded social network Truth Social remains uncertain. SPAC firm Digital World Acquisition, which Trump plans to use as a takeover vehicle for his IPO, has postponed its shareholder vote until October 10 on Thursday.
The vote is on extending the life of the SPAC company by twelve months. At stake is a $1.3 billion cash injection that Trump’s Media & Technology Group (TMTG), which operates the Truth social app, will receive from Digital World Acquisition Corp to bring TMTG to the public through the back door.
Digital World was due to be liquidated on Thursday and the money from the September 2021 IPO returned to shareholders if no further action was taken. However, the SPAC firm said Tuesday that its executives wanted to lend it $2.875 million to extend its term to Dec. 8 and avoid liquidation. Digital World officials did not respond Thursday to a question about whether that payment had been made.
Digital World is a stock exchange vehicle (SPAC, Special Purpose Acquisition Company) that raised $293 million in search of an acquisition target. New investors had pledged another billion dollars during the IPO.
Hard to reach private investors
65 percent of Digital World shareholders must now agree to avoid liquidation and extend Trump’s takeover deadline. Digital World struggles to get investors to vote. Most are private investors who are difficult to reach, insiders told Reuters news agency.
The vote had already been postponed on Tuesday to Thursday of this week. But even on Thursday, only about 40 percent of shareholders voted for an extension.
SPACs have a limited lifespan if they do not complete an acquisition. If the vote is rejected, management can continue Digital World for another six months. But the new truth promise of more than a billion dollars to social investors is only valid until September 20.
Subject of civil and criminal investigations
The circumstances under which Digital World selected the Trump company are the subject of a civil and criminal investigation. The announcement sparked a lot of hype among supporters of the ex-US president and investors at Digital World. However, the US Securities and Exchange Commission has suspended the transaction due to the ongoing investigation.
Without the IPO, further funding for Trump’s media group TMTG is open. According to Digital World, the money will run until April 2023. TMTG said last week that Trump’s social network Truth Social was in strong financial shape.
Meanwhile, Trump appears to be tempering expectations of the SPAC deal. He wrote on Truth Social last week, “I don’t need funding. I’m very rich.”
Source: Krone
I’m Wayne Wickman, a professional journalist and author for Today Times Live. My specialty is covering global news and current events, offering readers a unique perspective on the world’s most pressing issues. I’m passionate about storytelling and helping people stay informed on the goings-on of our planet.
