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Trump Media Partner DWAC Delays Truth Social Merger

This illustration photo shows the logo of Donald Trump’s new social media app, Truth Social, on a smartphone in Los Angeles, February 21, 2022.

chris delmas | AFP | Getty Images

The blank check company that plans to take Trump Media and Technology Group and its Truth Social platform public said Tuesday that shareholders voted to delay the deadline for its merger with the former president’s company by several months.

Shares of Digital World Acquisition Company. rose more than 5% following a brief shareholder meeting announcing the postponement. DWAC faced liquidation next month if it could not secure an extension, although the merger faces additional legal and financial hurdles. The Securities and Exchange Commission is investigating the Trump Media-DWAC deal, as are federal criminal investigators.

The company, which has generated no revenue and already has $1 billion in funding already at risk, has repeatedly delayed the meeting in recent months as it scrambled to secure the shareholder support. DWAC needed 65% of its shareholders to approve a deadline extension for its merger with Trump Media through September 2023. In a Monday securities filing, DWAC said there was “substantial doubt” about its ability to continue as a “going concern”.

DWAC failed to get the necessary votes from its large swath of retail investors. The meeting was adjourned several times. DWAC CEO Patrick Orlando launched an integrated extension with a $2.8 million contribution from his company Arc Global Investments II.

“It’s a really arduous process when you have as many shareholders as we do,” Orlando said in an interview with IPO Edge on Tuesday just before the shareholders’ meeting.

Orlando has been pushing for votes on Trump Media’s Truth Social platform and even urging Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to help spread the word. ‘effort.

The voting stakes were particularly high for some of the former president’s supporters, who shared on Truth Social and Reddit that they had invested thousands of dollars in DWAC as a show of support for the platform.

If a merger were to take place, it would give Trump Media hundreds of millions of dollars in funding. It has already come up against a series of legal and financial obstacles. The deal was the subject of a criminal investigation and its delay resulted in the loss of over $100 million in investment.

The former president had previously said he might take the company private. Internal documents showed that Trump Media was also considering mergers and partnerships with other right-wing platforms, including Rumble and Parler.

Over the weekend, Elon Musk, the new owner of Twitter, reinstated Trump on the social media platform. Twitter banned Trump following the January 6, 2021, uprising at the United States Capitol, where hundreds of his supporters rioted and disrupted lawmakers officially counting Electoral College votes. The former president has yet to tweet since his reinstatement.

“I would expect the truth [Social] to be the main platform for the president’s tweets, or his truths,” Orlando said during the fireside chat on Tuesday. “At Digital World, we don’t actually control anything to do with Truth and its users at this point. But we’re monitoring it and really liking what we’re seeing with user engagement.”

The special-purpose acquisition vehicle also handled fallout from a Trump Media executive’s whistleblower complaint to federal regulators. William Wilkerson, senior vice president of Trump Media, had filed a whistleblower complaint alleging securities violations in August. Wilkerson described himself as one of the company’s founders and said he no longer believed in its viability.

In September, the company said it lost $138.5 million of the $1 billion in private equity investor funding, also known as PIPE, to fund the merger. That same month, DWAC changed its mailing address to a UPS store in Miami.

In recent days, DWAC lost one of its board members when Justin Shaner, CEO of Shaner Properties in South Florida, resigned, according to a securities filing.

– CNBC’s Jack Stebbins contributed to this article.


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