NEW YORK, Oct 12 (Reuters) – Digital World Acquisition Corp (DWAC.O), the SPAC planning to merge with former President Donald Trump’s media technology company, this week raised $5.00 in the deal. announced that it would return $33 million to investors. , some have already withdrawn their $467 million pledge.
The development comes after a so-called private company that was supposed to provide $1 billion to Trump Media & Technology Group (TMTG), the operator of President Trump’s “Truth Social” platform, as part of a merger with Digital World. It means the end of an investment in stock (PIPE) transaction. .
A SPAC (special purpose acquisition company), or blank check company, is a publicly traded shell company that raises money to merge with a private company.
Digital World raised a $1 billion PIPE last year, but was unable to merge with TMTG by the September 2022 deadline after U.S. financial regulators put the agreement on hold over Digital World’s disclosure to investors. Could not complete. This gave PIPE investors the right to cancel their commitments.
TMTG CEO Devin Nunez said in a press release that the termination of PIPE “is in the best interest of TMTG stockholders to complete the merger with DWAC as soon as possible.”
A TMTG spokesperson said in a statement Thursday that the termination of the PIPE is “an important step toward completing the merger.” He did not respond to questions about why ending PIPE prior to the merger would be beneficial for TMTG.
An August 9 amendment to TMTG’s contract with Digital World called for the rollback of PIPE. The amendment would give Trump even more voting rights to Digital World’s new shares.
The unwinding of PIPE will leave Digital World with $293 million in cash raised in its September 2021 initial public offering, which will be donated to TMTG upon closing. If investors choose to redeem, their funds could shrink as well.
A TMTG spokesperson did not respond to questions about whether the company plans to raise additional funds. TMTG had previously raised $22.8 million in funding from private investors, Reuters reported in October last year.
Digital World and TMTG have tweaked their merger agreement to allow either side to terminate the agreement between October 31st and November 21st if the boards of both companies believe the merger is not in the best interest of shareholders. did. Trump controls 90% of TMTG, according to the February 2, 2021 service agreement.
Digital World has faced several challenges since signing the deal with TMTG in October 2021. The company, which is the subject of investigations by the U.S. Department of Justice and the Securities and Exchange Commission, has fired its chief executive officer and replaced its board of directors.
In September, Digital World investors voted to give the TMTG deal an extension of up to a year to complete, a deadline that had been pushed back multiple times. It remains unclear when and whether Digital World will ask shareholders to vote on the transaction with TMTG, a necessary step in consummating the transaction.
Digital World stock fell 2% on Thursday to $15.54, well below its March 2022 peak of about $97 per share.
Report by Helen Koster.Editing: Josie Kao and Rod Nickel
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