Trump’s Truth Social SPAC Plummets After Shareholders Reject Extension
Shares in the Truth Social’s special purpose acquisition vehicle (SPAC) opened down over 16% on Tuesday following a Rueters report that the company, which was set to merge with Trump Media & Technology, failed to achieve enough shareholder support for a year’s extension to complete the deal.
The stock fell down more than 22% premarket on Tuesday to $19.45, which comes on the heels of a YTD decline of more than 50%.
The outcome of the vote is set for Tuesday at a meeting of DWAC holders – most of whom are individual investors. According to CEO Patrick Orlando, it has been a struggle to get them to vote through their brokers.
DWAC needs at least 65% of shareholders to support the extension, which was nowhere near the case on Monday evening.
The merger has been delayed by a SEC investigation into the deal after announcing the merger plan last October. The company has warned previously that if the deal isn’t extended, the SPAC may be forced to liquidate.
According to Reuters, one option under consideration is to postpone the vote deadline as it tries to rally support for an extension. If they are unable to do so, the company has the right for a six-month extension without holder approval – though it’s unclear whether the company will attempt to do so.
Another issue for Digital World (DWAC) is that a $1 billion PIPE commitment group of investors is set to expire on Sept. 20 unless the transaction with Trump Media & Technology Group is completed. Investment banks for DWAC have been contacting PIPE investors in the last few weeks to see if they would consider extending the PIPE, Reuters added. –Seeking Alpha
In August DWAC filed to delay the release of its Q2 results.
Meanwhile, Google continues to bar the app from its Pay Store platform over ‘insufficient content moderation.’
Turns out it’s not so easy to just ‘build your own Twitter.’
When news of the SPAC merger first broke, shares in DWAC gained more than 350%, and have since dropped 74% from 2022 highs in March.
Tue, 09/06/2022 – 09:57