Donald Trump’s social network logo, Truth Social
By Svea Herbst-Bayliss
(Reuters) – The acquisition firm that agreed to merge with Donald Trump’s social media company failed to garner sufficient shareholder support for a one-year extension that would conclude the deal, people familiar with the matter said on Monday.
At stake is a $1.3 billion injection that Trump Media & Technology (TMTG), which operates the former president’s Truth Social app, is expected to receive from Digital World, a special purpose acquisition company (SPAC). ) who signed an agreement last October to list TMTG on the stock exchange.
The transaction is frozen amid investigations into the circumstances of the deal. Digital World had hoped that the US Securities and Exchange Commission (SEC), which is reviewing the deal, had already given the go-ahead for the transaction.
Digital World needs 65% of its shareholders to vote in favor of the proposal to extend its lifespan by 12 months for the measure to take effect. On Monday, fewer shareholders than necessary voted in favor, the sources said.
The result of the vote is expected to be announced at a special Digital World shareholder meeting on Tuesday. Company executives do not believe they will get enough support in time and have started to consider options, according to the sources.
Representatives for Digital World and TMTG did not immediately respond to requests for comment.
One option on the table is to delay the voting deadline to bolster shareholder support, the sources said. Without that, SPAC must settle on Thursday and return the money raised in its September 2021 IPO.
If Digital World fails to get support for a one-year extension, its management can extend the deal without shareholder endorsement for up to six months.
Digital World said the SEC and federal prosecutors are investigating the deal with TMTG, but the exact scope of the investigations is unclear.
If the deal is completed, TMTG is expected to receive $293 million from Digital World and $1 billion from a group of investors in the form of a private equity investment (Pipe), which is scheduled to expire on September 20, unless the deal is completed.
Digital World said it believes TMTG will have “sufficient funds” by April 2023.
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