Donald Trump’s social media company’s plans to merge with a special purpose acquisition company (SPAC) remain in the balance after Digital World Acquisition Corp adjourned its crucial shareholder meeting after two minutes on Tuesday as it said it will need to continue counting votes on whether to delay the merger, CNBC reported,
The special shareholders meeting was adjourned until 12.00pm ET on Thursday, September 9, 2022, the CNBC report said. The SPAC is looking for shareholder support for a one-year extension to complete the deal. Currently, it has a Thursday deadline to take Trump Media & Technology Group (TMTG) – which operates the former US president’s Truth Social app – public.
Digital World Acquisition has previously warned that a failure to extend the merger deadline could force the SPAC to liquidate itself.
READ: Donald Trump social media company’s plans to merge with SPAC dealt a blow – reports
Adding to the uncertainty, CNBC noted that Digital World Acquisition also submitted a securities filing Tuesday that highlighted one of Trump’s recent ‘Truths’ on his social media platform, which cast more doubt on the SPAC deal.
It said the former US President, who had announced his intention to create a new social media platform after he was banned from Facebook and Twitter last year, posted on Saturday: “In any event, I don’t need financing, ‘I’m really rich! Private company anyone???”
Digital World Acquisition shares plunged on Tuesday after Reuters reported that it had failed to get enough shareholder votes to extend the deadline for its merger with TMTG.
The proposed transaction, signed last October, has been on ice amid civil and criminal probes into the circumstances around the deal. Reuters said 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 for the transaction to proceed.
Most of Digital World’s shareholders are individual investors and getting them to vote through their brokers has been challenging, Digital World chief executive Patrick Orlando said last week, Reuters reported.
Digital World needs 65% of its shareholders to vote in favor of the proposal to extend its life by 12 months for the move to become effective. By Monday evening, far fewer Digital World shareholders than those required had voted in favor, its sources told Reuters.
Were Digital World to fail in its bid to get its shareholders to back the one-year extension, its management has the right to extend its life without shareholder approval by up to six months. It is unclear whether Digital World will pursue this option and if it would provide enough time for regulators to reach a conclusion on whether to allow the deal to proceed, Reuters said.
Digital World has disclosed that the SEC, the Financial Industry Regulatory Authority and federal prosecutors have been investigating the deal with TMTG, though the exact scope of the probes is unclear.
Were the deal to be completed, TMTG would receive $293 million that Digital World has on hand plus $1 billion committed from a group of investors in the form of a private investment in public equity (PIPE). The PIPE is scheduled to expire on September 20 unless the deal is completed.
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