This illustration photo shows Donald Trump’s new social media app Truth Social’s logo on a smartphone in Los Angeles, February 21, 2022.
Chris Delmas | AFP | GettyImages
The blank check company that plans to take Trump Media and Technology Group and its Truth Social platform public said Tuesday that shareholders voted to delay a deadline for its merger with the former president’s firm by several months.
Shares of Digital World Acquisition Corp. rose more than 5% following a brief shareholder meeting announcing the delay. DWAC faced liquidation next month if it couldn’t get a deadline extension, although the merger faces additional legal and financial hurdles. The Securities and Exchange Commission is probing the Trump Media-DWAC deal, as are federal criminal investigators.
The company, which hasn’t generated any revenue and already has $1 billion in financing already at risk, had delayed the meeting multiple times over recent months as it worked to garner support from shareholders. DWAC needed 65% of its shareholders to approve an extension of the deadline to merge with Trump Media until September 2023. In a securities filing Monday, DWAC said there was “substantial doubt” about its ability to continue as a “going concern.”
DWAC has previously failed to get the necessary votes from its large swath of retail investors. The meeting was adjourned many times. DWAC CEO Patrick Orlando initiated a built-in extension with a $2.8 million contribution from his company Arc Global Investments II.
“It’s a really arduous process when you have as many stockholders as we did,” Orlando said during an interview with IPO Edge on Tuesday immediately prior to the shareholder meeting.
Orlando has been working to drum up votes on Trump Media’s Truth Social platform, and even urged Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to help publicize the effort.
The stakes of the vote were particularly high for some of the former president’s supporters, who shared on Social Truth and Reddit that they’ve invested thousands of dollars in DWAC in a nod of support for the platform.
If a merger were to take place, it would give hundreds of millions of dollars in funding to Trump Media. It has already faced a series of legal and financial obstacles. The deal has been the subject of a criminal investigation and its delay has resulted in the loss of over $100 million in investment.
The former president previously said he could take the company private. Internal documents have shown that Trump Media also considered mergers and partnerships with other right-wing-friendly platforms, including Rumble and Parler.
Over the weekend, Elon Musk, the new owner of Twitter, reinstated Trump on the social media platform. Twitter banned Trump in the wake of the Jan. 6, 2021, insurrection at the US Capitol, where hundreds of his supporters rioted and disrupted lawmakers who were formally counting Electoral College votes. The former president has yet to tweet since his reinstatement.
I would expect Truth [Social] to be the main platform for the president’s tweets, or, his truths,” Orlando said during the fireside chat Tuesday. “At Digital World, we don’t actually control anything to do with Truth and its users at this point. But we’re watching it, and we really like what we see with user engagement.”
The special purpose acquisition vehicle has also been dealing with the fallout from a Trump Media executive’s whistleblower complaint to federal regulators. William Wilkerson, a senior vice president at Trump Media, had filed a whistleblower complaint alleging securities violations in August. Wilkerson has described himself as one of the company’s founders and said he no longer believes in its viability.
In September, the company said it lost $138.5 million of the $1 billion in financing from private investors in public equity, also known as PIPE, to fund the merger. That same month, DWAC changed its mailing address to a UPS Store in Miami.
In recent days, DWAC lost one of its board members when Justin Shaner, CEO of Shaner Properties in South Florida, resigned, according to a securities filing.
—CNBC’s Jack Stebbins contributed to this article.