Digital World Acquisition Corp. (DWAC), the so-called blank check company (or special purpose acquisition company) that previously announced a deal to merge with Trump’s company behind Truth Social and take it public, is losing ground.
According to a Friday filing with the Securities and Exchange Commission (SEC), investors are ditching $139 million in pledges assembled as part of $1 billion in funding commitments that were contingent on the merger actually happening. So far, DWAC and Trump’s company are apparently — among other issues — waiting on further action from the SEC on the proposed business combination, while also facing civil and criminal investigations into issues including potentially illegal negotiations between the two sides before DWAC went public late last year. DWAC is aiming for shareholder approval for extending the deadline for merging with Trump’s company by another year, but with many investors in the prominently Trump-aligned company individuals (not firms), getting their votes is difficult, according to the DWAC CEO. Even Rep. Marjorie Taylor Greene (R-Ga.) reported investing in DWAC.
The company has extended a deadline for shareholders voting on the proposed extension to the middle of October, and in the meantime, a cash infusion of $2.88 million from managers will keep the company viable for a total of another three months. As for what were originally $1 billion in investments, which would provide financial support to Trump’s own operation if the merger is ever finalized, more are in jeopardy. In the context of financing, a September 20 deadline was originally set for the completion of the deal, after which those behind the $1 billion in pledges could leave. “More investors could pull out in the next few weeks, sources said, as they can terminate anytime after the deadline,” as Reuters explained the situation. “Many are waiting for DWAC to propose more preferred terms to PIPE investors, sources added.” PIPE refers to private investment in public equity; it’s an acronym. The stock price for DWAC continues plummeting. Across the past six months, it’s down over 77 percent and is now in the lowest range since the merger was originally announced.
One of the companies withdrawing from their planned investments is Sabby Management, which was responsible for $100 million in pledges. Trump’s firm is threatening legal action against the SEC and as could be expected with anything even remotely Trump-affiliated is alleging that there’s political bias underlying the agency’s supposedly slow action. “In light of the obvious conflicts of interest among SEC officials and clear indications of political bias, TMTG is now exploring legal action against the SEC. Despite the increasing weaponization and politicization of government agencies, Truth Social will continue its expansion plans, supported by the unprecedented levels of user engagement on the platform,” TMTG (which stands for Trump Media & Technology Group) said in a filing with the federal agency. Federal demands for info have targeted DWAC, then-members of its board of directors, and the Trump firm, where Devin Nunes serves at the helm. Plans have previously circulated for TMTG branching out beyond Truth Social, which visually and functionally resembles Twitter. One example is a conservatively leaning TV streaming service.