September 22, 2022: -Digital World Acquisition Corp., the group which plans to take Trump Media and Technology Group public, faces investor concerns about a potential failed merger with former President Donald Trump’s company.
On Tuesday, the Financial Times reported that DWAC Chief Executive Patrick Orlando is dealing with investors, saying they would back the company through private investment in public equity, or PIPE, deal.
The $1 billion contract was set to finish Tuesday. If it falls apart, it would mean less cash for Trump Media, even if it went public through a merger with DWAC. Orlando pushes for a 10-day extension, according to the newspaper.
The FT reported that the PIPE investors hope to bring down the minimum conversion price for their preferred stock from $10 to as low as $2, citing a person involved in the discussions. That would improve their possible profit on the deal, even in the worst-case scenario, as it would give the investors more claims and dilute different shareholders’ stakes, including Trump’s.
The negotiation attempts to shift risk to DWAC and Trump Media, which owns Truth Social. DWAC claims are trading at around $20, down significantly from $97 highs but still above the $10 liquidation price.
“Trump wants to assure he doesn’t face a lot of dilution,” one person concerned told the FT. “Optically, he wanted to avoid a $2 floor. It looks weak, and he does not want to examine weakly.”
DWAC is a particular purpose acquisition company, or SPAC, a publicly traded commodity that publicizes pre-existing institutions. Orlando extended a deadline to connect with Trump Media beyond its early September date with a $2.8 million infusion from the company, the SPAC sponsor, ARC Global Investments II. DWAC pushes shareholders to approve a yearlong wing of the deadline. The next shareholder meeting is set for
the coming month.
Trump founded Trump Media and Technology Group and its platform Truth Social following. He was banned from Twitter following January 6, 2021, Capitol riot. The former president is facing multiple inquiries connected to the attempt to overturn the 2020 presidential election and the removal of diplomatic documents from the White House. Trump Media’s planning merger with DWAC is the subject of federal probes into potential securities violations.