Trump SPAC shareholders vote on postponing the merger: Here’s what to know

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Digital World Acquisition Corp., the special-purpose acquisition company that plans to take former President Donald Trump’s media company public, has scheduled a shareholder meeting on Tuesday as it seeks to extend the merger deadline until at one year.

Trump Media and Technology Group and SPAC have come under intense scrutiny in recent months. A federal investigation has been launched into possible securities violations regarding the deal. Fox Business reported that Truth Social was in financial difficulty and had failed to pay a vendor more than $1 million in contract payments, an allegation the company has denied.

The DWAC itself has warned shareholders that a decline in the ex-chairman’s popularity could hurt the deal. Indeed, the vote comes amid a Justice Department criminal investigation into whether Trump illegally removed thousands of White House documents, including those marked ‘Top Secret’ and ‘Classified’, from his home. deprived of Mar-a-Lago after leaving the presidency.

Truth Social has faced its own scrutiny. The app was banned from the Google Play Store for violating the store’s policies regarding moderation of user-generated content. The platform remains accessible online and on the Apple App Store.

DWAC and Trump Media face a deadline Thursday to complete the merger, and SPAC is eagerly seeking an extension.

DWAC needs 65% of shareholders to approve the delay. Patrick Orlando, CEO of DWAC, issued a barrage of appeals to shareholders through various channels, including Truth Social, urging them to approve the extension. Non-votes are essentially counted as “no” votes.

Some of SPACs’ institutional investors, including Lighthouse Investment Partners and Pentwater Capital Management, did not comment on the upcoming vote when reached by CNBC. Citadel Investment Group said the company held shares as a “market maker”, not as a voting shareholder.

DWAC previously warned that a “no” result could force DWAC into liquidation. The SPAC however has built-in extensions of up to six months which can be initiated by sponsors adding money to the trust.

Orlando-based ARC Global Investments owns 20% of those votes, he revealed in a interview last Thursday with IPO Edge. Still, he said, “the retail shareholder has a lot of clout.”

Trump Media and Technology Group and Truth Social were founded after Trump was banned from Twitter following the Capitol Riot on January 6, 2021. That day, his supporters stormed the building in an attempt to prevent the certification of Joe Biden’s victory in the 2020 presidential election.

Asset Media announced in October 2021 that it would merge with DWAC to take the company public. Trump Media, led by former Republican U.S. Representative Devin Nunes, said it also plans to launch video streaming services TMTG News and TMTG+.

The high-profile nature of the merger attracted more retail investors than SPACs normally attract. Institutional investors in SPACs mostly did not respond to a request for comment.

For investors, the liquidation of DWAC would bring about $10 per share. Shares of the so-called blank check company have been trading around $25 lately. That’s a far cry from its 2022 peak of around $97 in March. Low shareholder vote turnout could frustrate the deal.

” Lets go #rocktheproxyFlorida-based Orlando said in one of his many posts on Truth Social during voting time. “Shoot for massive voter engagement and turnout!!!!”

Asked about investigations into the DWAC-Trump Media deal, Orlando said DWAC was “aware of numerous targets” before the bid and the company was complying with all investigation requests.

“If there’s an investigation, we respond to the investigation. If there’s a procedure we need to follow, we follow that procedure,” Orlando said during the IPO Edge interview.

The DWAC CEO also said Trump remains chairman of Trump Media, contradicting reports that he left the board just weeks before the company was subpoenaed. Orlando reiterated the potential risks posed by Trump’s volatile popularity with the public.

“There is a risk factor. We need to let people know that these are things you should be thinking about,” Orlando told IPO Edge. “If certain negative events occur, they will negatively impact a stock.”

The results of the shareholder vote are expected to be announced on Tuesday, unless the company decides to adjourn the meeting.

– CNBC’s Yun Li contributed to this report.

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