Digital World Acquisition (NASDAQ:DWAC)
Trump SPAC Digital World Acquisition (NASDAQ:DWAC) fell 17% following news that a request for an extension to finish the deal with Trump’s social media firm and app Truth Social was denied.
According to a Reuters article, which quoted persons acquainted, Digital World (DWAC) executives don’t think they have enough votes to gain a one-year extension to close the purchase. In order to extend DWAC, 65% of holders must vote in favor. The corporation stated at the beginning of the meeting on Tuesday that DWAC had postponed the shareholder vote until Thursday. According to Reuters, the majority of Digital World (DWAC) shareholders are individual investors, and getting them to use their brokers to cast their votes has proven challenging.
Shareholders of DWAC were expected to decide whether to give the SPAC an additional year to complete a sale. DWAC has previously issued a warning that the SPAC might be put into liquidation if the arrangement isn’t extended.
According to Reuters, one choice being discussed by DWAC as it seeks support for an extension is to postpone the vote date. In the event that DWAC is unsuccessful in obtaining the extension from shareholders, it is permitted to request a six-month extension without holder consent. At this time, it’s unclear whether DWAC will take this action.
Uncertainty
A $1 billion PIPE pledge group of investors is likely to expire on September 20 if the deal with Trump Media & Technology Group isn’t finalized, which presents another problem for Digital World (DWAC). In the past several weeks, PIPE investors have been contacted by investment banks for DWAC to ask if they would consider extending the PIPE, according to Reuters.
Separately, according to the New York Post, Trump has stopped endorsing Truth Social’s partnership with Digital World (DWAC) since the SEC is looking into it and he doesn’t want to get embroiled in yet another legal dispute.
Trump appeared to imply that he didn’t require funding for the social media company in a post on his Truth Social platform on Saturday, writing “SEC is attempting to harm the finance company (SPAC). The future? In any case, I am financially self-sufficient. Someone from a private company?”
Legal hurdles
In recent months, the SEC has filed subpoenas to gather information about the merger of Trump Media & Technology Group and DWAC. Early in December, the SPAC announced that the SEC had made a voluntary information and document request about the combination.
DWAC filed a request to postpone the publishing of its Q2 earnings last month. Shares of DWAC have fallen 58% this year as a result of regulatory inquiries and prospective competition from a Twitter (TWTR), owned by billionaire Elon Musk, who has stated he will reinstate Trump on the website from which he was previously barred.
The revelation that Digital World Acquisition (DWAC) will IPO Trump’s new media firm through a SPAC merger resulted in a significant surge for the company. The news was released on October 21 and the stock increased by more than 350%. From their peak in early March, DWAC share prices have fallen by 74%.
Featured Image – Megapixl © Alexandersikov
Author Jowi Kwasu 
