Digital World Acquisition Corp. (DWAC), a so-called blank check company otherwise formally known as a special purpose acquisition company, is looking to merge with the Trump firm behind the social media site Truth Social and take the Trump-branded company public. The deal to that end was first revealed last October.
Now, DWAC is evidently preparing for a potential one-year extension of the deadline for completing the merger and for the possibility of liquidation if the merger doesn’t go through because of regulatory approval issues, according to a new filing. The firm and the Trump-branded company, known as the Trump Media & Technology Group (TMTG), are both under federal investigation for issues including potentially illegal negotiations ahead of DWAC going public about the merger arrangement. Notably, DWAC also explicitly cited Trump’s precarious popularity levels in the new federal securities filing, which schedules a September 6 shareholders meeting to deal with potentially tacking a year onto the deadline for merging with Trump’s company. The deadline is currently September 8 of this year.
“If President Trump becomes less popular or there are further controversies that damage his credibility or the desire of people to use a platform associated with him, and from which he will derive financial benefit, TMTG’s results of operations, as well as the outcome of the proposed Business combination, could be adversely affected,” DWAC said. Perhaps the company is concerned about the federal criminal probe into the handling of highly sensitive government docs from the Trump administration that were taken to Trump’s Mar-a-Lago resort.
DWAC also cited federal investigations as possibly sparking liquidation. “Our failure to obtain any required regulatory approvals in connection with the Business Combination or to resolve certain ongoing investigations within the requisite time period may require us to liquidate,” the company added in the filing. In other words, it doesn’t sound as though the firm, led by CEO Patrick Orlando, has a back-up plan. Broadly speaking, that’s one of the issues under scrutiny by federal financial authorities. The SEC sought “communications regarding and due diligence of potential targets other than” Trump’s company, according to a DWAC filing from this June. DWAC and the Trump Media & Technology Group are also the subjects of a federal grand jury investigation. DWAC and each of the then-members of the company’s board of directors were subpoenaed, and the Trump-branded company itself was also subpoenaed.
The Trump company also received a subpoena from the SEC. The DWAC stock price hasn’t shifted much in a month. Across six months, it’s down over 65 percent. Besides its other concerns, DWAC noted in its new securities filing this week that certain poll data indicates significant numbers of Americans wouldn’t be interested in using Truth Social. Among total respondents, just 30 percent evidently indicated they’d use a Trump-associated social media site, according to one survey the company cited. In another poll, only 60 percent of Republicans said they’d use such a platform.
