More Troubles Arise For Truth Social

[Webster]

(The Guardian) More turbulence for Trump's Truth Social business
The blank-check acquisition firm that agreed to merge with former US president Donald Trump’s social media company has failed today to secure enough shareholder support for a one-year extension to complete the deal, Reuters reports.

At stake is a $1.3bn cash infusion that Trump Media & Technology Group (TMTG), which operates the Truth Social app, stands to receive from Digital World Acquisition Corp, the special purpose acquisition company (SPAC) that inked a deal in October to take TMTG public.

The transaction has been on ice amid civil and criminal probes into the circumstances around the deal. Digital World had been hoping that the US Securities and Exchange Commission (SEC), which is reviewing its disclosures on the deal, would have given its blessing by now.

Digital World chief executive Patrick Orlando told a special meeting of his shareholders today he would push back to noon on Thursday the deadline for the vote on extending the life of the SPAC by 12 months.

Digital World needs 65% of its shareholders to vote in favor of the proposal, but the support as of late Monday fell far short, Reuters reported. Digital World did not disclose the margin on Tuesday.

Digital World shares fell 17% to $20.74 in New York early Tuesday afternoon.

Digital World is set to liquidate on Thursday and return the money raised in its September 2021 initial public offering to shareholders unless action is taken.

Digital World shareholders had been given more than two weeks to vote on the SPAC’s extension and it is unclear if two additional days would make a difference. Most Digital World shareholders are individuals and getting them to vote through their brokers has been challenging, Orlando said last week.

If Digital World fails to get enough shareholder support, its management has the right to unilaterally extend the life of the SPAC by up to six months.
Trump appeared to manage expectations for the deal with a post over the weekend on Truth Social: I don’t need financing, ‘I’m really rich!’ Private company anyone???”

Digital World has disclosed that the SEC, Financial Industry Regulatory Authority and federal prosecutors have been investigating the deal with TMTG, though the exact scope of the probes is unclear.