Digital World Acquisition CEO Patrick Orlando in an interview raised the spectre of low turnout among retail investors when shareholders vote next week on a 12-month extension of the deadline for merging with Trump Media & Technology Group.
“Typically in proxy votes, the participation of retail shareholders is relatively low,” Orlando said in a transcript of the interview. “I believe it’s somewhere in the, the 28% range is once the district (sic) that I read, you know, we’re looking for far greater participation.”
Shareholders are scheduled to vote Sept. 6 on the proposed deadline extension, which would run to Sept. 8, 2023. If the proposal is not approved, Digital World has said it will begin winding down. The SPAC needs at least 65% of shares outstanding to vote for the extension in order to continue operating.
The transaction includes approximately $1.25 billion of net proceeds — including a $1 billion PIPE — that would be delivered to the ex-president’s company at close, assuming no redemptions by the SPAC’s stockholders.
Digital World has also 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.
Trump Media has been beset by controversy, executive departures, and technical difficulties ever since the company launch was announced last October.
“We do have a much higher retail shareholding than most other SPACs, you know, many SPACs end up being held in majority by institutions,” Orlando said in the interview. “I believe we’re majority held by retail and it’s incredibly important to have our shareholders get their votes in.”
Some SPAC market commentators have referred to Digital World as a meme stock because of its connection to, and dependence on, a single personality. Digital World’s own regulatory filings ahead of the extension vote note that the success of the combined company, if the deal is approved, will depend heavily on the public’s attitude toward Trump. Read more.
