By
Bena Ilyas
March 11th, 2024
According to the report, the majority of DWAC’s shareholders are private individuals who typically vote through their brokers.
Digital World Acquisition Corp (DWAC), the special purpose acquisition company (SPAC) that entered into a deal to take former President Donald Trump’s Truth Social platform public is having a struggle getting shareholders’ nod to extend the deadline for the listing to happen.
According to a Reuters report, the United States Securities and Exchange Commission (SEC) is reviewing the disclosures on the deal between DWAC and Truth Social’s parent company, Trump Media and Technology Group (TMTG). This disclosure review takes time, and for it to be effective, at least a year’s extension to help the deal scale through is needed.
The proposed TMTG listing through the DWAC shell company is projected to inject as much as $1.3 billion into the social media company. The sum of $293 million, which is the cash at hand for DWAC will first be used to bankroll the Truth Social platform while $1 billion, committed by investors through Private Investments in Public Equity (PIPE) will be rolled out over time.
This PIPE investment is billed to expire on September 20 unless DWAC has been able to complete a listing deal by that time. This timeline, considering the Disclosure push from the SEC makes it unrealistic, thus birthing the need for the time extension.
According to the report, the majority of DWAC’s shareholders are private individuals who typically vote through their brokers. Gathering these investors has proven to be more difficult than anticipated. For the needed time extension to scale through, at least 65% of DWAC’s shareholders will need to give their approval.
The report also has it that DAWC’s investment bankers have been reaching out to the SPAC’s shareholders to see if the PIPE deadline can be extended for a year.
Probable Way Forward for Truth Social’s SPAC Listing
With a tiny window left, anything is possible and the shareholder’s vote may finally be secured. However, the parties involved are considering a number of alternative plans, one of which is for DWAC’s executive to exercise their rights to extend the SPAC’s viability by 6 months.
While this move can help with the disclosure reviews, it may not necessarily save the PIPE investments if the shareholders who committed funds to the vehicle fail to extend. For the time being, TMTG has put up a front that it has robust financial backing that has made it continue to operate without a hitch.
Some of Truth Social’s funding comes from the $22.6 million it secured through convertible promissory notes last year and an additional $15.4 million through bridge financing in the first quarter of this year. For the period prior to the closing of the deal, Truth Social may be able to power its operations financially according to inside sources.
While all eyes are on the SPAC listing, Truth Social said it will soon be open for ads. Truth Social was created by Donald Trump following his ousting from mainstream social media platforms including Twitter and Facebook for his role in the January 6 insurrection by his supporters at the Capitol.
