Digital World in an 8-K filing disclosed several new risk factors that the SPAC said could delay or possibly derail its proposed merger with Trump Media & Technology Group.
Trump “is the subject of numerous legal proceedings, the scope and scale of which are unprecedented for a former President of the United States and current candidate for that office,” the filing states.
The filing points to a ruling last week by a New York judge who fined Trump, his adult sons and their namesake company $354.8 million plus approximately $100 million in pre-judgment interest for financial fraud. The ex-president also faces 91 felony counts in four state and federal cases related to 2020 election interference and Trump’s alleged mishandling of classified documents after he was voted out of the presidency.
Separately, the Trump Organization was found guilty of criminal tax fraud in December 2022, and fined $1.6 million in January 2023.
Digital World said it cannot guarantee that opponents of Trump won’t make moves aimed at preventing the deal from closing.
Additionally, the risk update cautioned that the deal could be delayed by Trump Media’s co-founders, Andy Litinsky and Wes Moss, whose investment company United Atlantic Ventures has threatened to block the deal. UAV has sent letters to Digital World asserting that an early agreement with Trump from 2021 remains in effect and gives them the right to appoint two directors to the board.
“Assertions made by UAV, and the potential claims arising therefrom, could lead to substantial legal costs, distract management, and have adverse effects on the business operations and financial health of TMTG and/or the Combined Entity,” Digital World notes in the filing.
Various parties, “including parties who may have political, economic or non-economic motivations, may seek to make opportunistic assertions or claims with respect to TMTG and/or Digital World, and may attempt to interfere with, substantially delay or entirely prevent consummation of the business combination,” the SPAC added.
Digital World has slated a March 22 meeting for shareholders to vote on the deal, which was announced in October 2021.
If the merger is completed, Digital World is on the hook for an $18 million fine levied by the SEC, which charged the SPAC with issuing misleading statements to investors. The SEC determined the SPAC before its IPO had held discussing with Trump Media about a deal, which would be in violation of SPAC regulations.
If the deal does close, Trump would own nearly 79 million shares in the combined business, or up to 69%. That stake could be worth as much as $3.95 billion based on the SPAC’s trading price, although Trump’s stock would be subject to a six-month lock-up.
Digital World earlier this month revealed a dispute over compensation with its founder and former CEO Patrick Orlando, who was ousted almost a year ago. Read more.
