Digital World Acquisition in a definitive proxy filing asks shareholders to vote Sept. 6 on a proposed deadline extension that would run to Sept. 8, 2023. If the proposal is not approved, Digital World says it will begin winding down.
The SPAC said it needs more time to finalize the deal with Trump Media & Technology Group (TMTG). The transaction includes approximately $1.25 billion of net proceeds that would be delivered to TMTG at close, assuming no redemptions by the SPAC’s stockholders.
The SPAC’s sponsor owns 5.49 million founder shares that were issued prior to the IPO, and 1,133,484 private placement units. Digital World’s CFO owns 10,000 founder shares, and each independent director, including one former director, owns 7,500 founder shares. Further, 11 qualified institutional buyers or institutional accredited investors own the remaining 1.65 million founder shares.
Digital World has acknowledged it is under investigation by both the Department of Justice and the SEC. Securities regulators and a federal grand jury in New York have subpoenaed Trump Media & Technology Group, plus some of its current and former employees. One of the key points in the SEC investigation is whether the SPAC had any merger discusssions with the target before Digital World made its IPO last September. Such discussions would be illegal.
The SPAC in a June 8-K filing warned that the investigations could delay the deal with the ex-president’s company.
Trump Media has been beset by controversy, executive departures, and technical difficulties ever since the company launch was announced last October.
