Digital World Acquisition adjourned its shareholder meeting late yesterday for the fourth time this week as management scrambles to secure enough votes for a 12-month deadline extension to merge with Trump Media & Technology Group. The SPAC needs 65% of shares outstanding to support the proposal.
Lacking the requisite votes, Digital World in a press release said it would reconvene the special meeting on Oct. 10. Its sponsor, ARC Global Investments II, deposited $2.875 million (10 cents a share) into the SPAC’s trust, giving Digital World an automatic extension until Dec. 8. This is the first of two three-month lifelines available under the company’s governing documents. The cash infusion bumps the per-share liquidation or redemption price to about $10.30 per share.
Digital World’s business combination deadline was yesterday, when the SPAC adjourned its shareholder meeting three times due to insufficient favorable votes on the extension. The SPAC had also adjourned for the same reason on Tuesday.
Digital World previously warned that the vote’s failure could result in the SPAC’s liquidation.
At stake is a $1.3 billion cash infusion for Trump’s company, including funds from Digital World’s IPO as well as a $1 billion PIPE (due to expire Sept. 20 if a deal isn’t done by then). Trump Media and Technology Group’s potential listing on the stock market also hangs in the balance.
Digital World CEO Patrick Orlando in interviews has spoken of the challenge in getting retail investors – which represent a majority of the SPAC’s shareholders – to vote on proxy matters. The SPAC in regulatory filings has also pointed to an ongoing SEC investigation as a key reason for the delay in completing the deal with Donald Trump’s social media company. The SEC is looking into whether Digital World launched its IPO with Trump Media already planned as a merger target, which would be illegal. The Financial Industry Regulatory Authority and federal prosecutors have also been investigating the deal with TMTG.
In a separate press release issued last night, Trump’s company fired back at the SEC in a statement:
“The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors, roughly 90 percent of whom are small, retail shareholders whom the SEC is chartered to protect. Despite its standard practice to provide comments within 30 days, the SEC has failed to give meaningful feedback on DWAC’s registration statement for a stunning 115 days and counting. In the interests of simple fairness, the SEC needs to set aside any improper political considerations and bring its review to a swift conclusion.”
The press release from Trump Media makes no mention of the ongoing federal investigations into the deal.
