SPAC stated to return $533 million of funds received for Trump’s Media and Technology venture
Date: September 13, 2023
Location: Washington, United States
THE SOIL – The media and technology venture connected to the late US President Donald Trump, Digital World Acquisition Corp (DWAC.O), a special purpose acquisition company (SPAC), stated this week that it will return $533 million of the funds received for the merger. This decision is the result of several investors choosing to withhold their $467 million initial pledges.
The closing of a financial arrangement that was intended to give Trump Media & Technology Group (TMTG), the company behind Trump’s Truth Social platform, a sizeable $1 billion infusion as part of its merger with Digital World, is marked by the termination of the private investment in public equity (PIPE) deal.
A SPAC, which stands for Special Purpose Acquisition Company or often referred to as a blank-check company, is essentially a publicly traded empty corporate shell that secures funding with the intention of merging with a privately held company.
Digital World Obtain $1 billion in funding through PIPE
Digital World was able to obtain $1 billion in funding through Private Investment in Public Equity (PIPE) last year. The U.S. financial regulators’ intervention, however, prevented them from completing their merger with TMTG by the September 2022 deadline because they expressed worries about the information that Digital World had given to its investors. The PIPE investors were given the opportunity to back out of their financial obligations due to this delay.
In an official statement, Devin Nunes, the CEO of TMTG, stated that the decision to end the Private Investment in Public Equity (PIPE) arrangement was made with the best interests of TMTG’s shareholders in mind. With this action, we hope to ensure a timely and effective merger with DWAC.
In a statement posted on Thursday, a TMTG spokesman stated that the PIPE’s discontinuance was a major step forward in their merger process. She did not respond when questioned about the rationale behind terminating the PIPE prior to the merger.
Agreement between Digital World and TMTG
A change to the agreement between Digital World and TMTG was made on August 9th, which stipulated the dismantling of the PIPE arrangement. Following this change, Trump received a new allotment of Digital World shares, which conferred upon him voting rights and more influence.
Digital World would keep the $293 million in cash it received during its September 2021 initial public offering (IPO), which is designated for TMTG when the deal is completed, in the event that the PIPE investment is reversed. In the event that investors decide to redeem their shares, this cash reserve may also decrease.
The merger agreement between Digital World and TMTG has been modified to let any party to terminate it between October 31 and November 21 in the event that their boards determine that the combination will not be in the best interests of the shareholders. According to a February 2, 2021, service agreement, Trump controls more than 90% of TMTG.