The future of former President Donald J. Trump’s social media platform remains in doubt after a well-funded company it was planning to merge with announced on Tuesday that it would need a few more days to gather shareholder support, act to extend the deadline for completion.
Digital World Acquisition held a meeting Tuesday to announce the outcome of the shareholder vote to extend the deadline for the merger to be completed by another year. But shortly after the meeting began, Digital World chief executive officer Patrick Orlando announced that he was adjourning the meeting to Thursday to give investors more time to vote.
If Special Purpose Acquisition Company (SPAC) can’t get 65 percent of shareholders to approve the extension, it could be forced to liquidate the nearly $300 million it raised in an IPO last September return to shareholders.
But the SPAC’s sponsor, also chaired by Mr Orlando, said in a regulatory filing Tuesday afternoon that liquidation could be avoided even if shareholders don’t agree to the one-year extension. The filing says the sponsor is willing to give Digital World an additional $2.8 million to give it an additional three months to close the deal.
The SPAC’s charter allows the sponsor to unilaterally extend the period for completing a deal by depositing funds into the special bank account used to store the dollars raised from the IPO
The potential failure of the deal has raised questions about the future of Trump Media & Technology Group and its flagship social media app Truth Social, the Twitter-like platform that backed Mr Trump after Twitter blocked him from posting the Post January 6th. 2021, attack on the Capitol.
Digital World, which went public a year ago, had taken until Sept. 8 – Thursday – to complete a merger with another company. Duplicate investigations by federal prosecutors and securities regulators thwarted the merger and led to the delay.
Without the cash injection from Digital World, Trump Media may need to raise additional funding or find another merger partner.
Meanwhile, one of Trump Media’s key business partners, Rumble, is nearing completion of its own merger with a SPAC. On September 15, CF Acquisition Corp. VI to announce whether its shareholders have approved a merger with Rumble, an online video platform that offers a conservative alternative to YouTube.
Following the announcement, Digital World shares fell about 15 percent. They closed at just over $22, down more than 11 percent on the day.