A SPAC set to take former President Donald Trump’s new media company public could be facing another setback. Here’s the latest.
What Happened: A shareholder vote for SPAC Digital World Acquisition Corporation DWAC was delayed to October after failing to generate enough votes to extend the vote on a merger with Trump Media & Technology Group.
The SPAC failed to pay proxy firm Saratoga Proxy Consulting which helped solicit votes from public shareholders. The amount owed is said to be six figures.
Digital World Acquisition Corporation CEO Patrick Orlando told Saratoga Proxy Consulting it did not have money to pay the consulting bill, according to a report from the Financial Times.
A new proxy firm called Alliance Advisors has been hired to help share information on the merger vote, now delayed until October.
The SPAC is actively seeking shareholder approval to extend the merger vote date for one year to September 2023.
Around 40% of public shareholders of Digital World Acquisition voted in favor of the merger vote extension. A 65% vote in favor is required to approve the extension of the merger deadline.
The current shareholder deadline to vote on the merger vote extension is Oct. 10, 2022.
The SPAC can extend its deadline to March 8, 2023 without shareholder approval. If the merger extension to September 2023 is not approved, the company would have to complete the merger by March 8, 2023 or liquidate its assets.
Why It’s Important: The latest report of the SPAC having no money available to pay the proxy firm comes on the heels of another company linked to providing work for Trump Media & Technology Group not being paid.
Truth Social, a social media platform owned by Trump Media & Technology Group, stopped making payments to its web-hosting provider. Fox Business Network reported that RightForge claimed Truth Social was $1.6 million behind in payments to the company.
Among the risk factors in the SPAC merger agreement were mentions of the previous history of bankruptcies by companies linked to Trump. The SPAC said, “there can be no assurances that TMTG will not also become bankrupt.”
An investigation in 2016 by USA Today highlighted numerous lawsuits filed against Trump and his company over not being paid for their work. The report also found violations of the Fair Labor Standards Act against Trump-affiliated companies.
Trump brushed off the report at the time.
“Let’s say that they do a job that’s not good, or a job that they didn’t finish, or a job that was way late. I’ll deduct from their contract, absolutely,” Trump said. “That’s what the country should be doing.”
Truth Social is currently available on Apple Inc AAPL devices via the iOS store. The app saw a surge in downloads after the FBI raid at Mar-a-Lago. The app is taking pre-orders for devices that use the Android operating system, owned by Alphabet Inc GOOGGOOGL. Google has denied the company from being added over concerns of a lack of content moderation.
The report also comes as Digital World Acquisition executives like Orlando could make hundreds of millions of dollars if the merger goes through and face potential losses if the merger is not approved.
DWAC Price Action: Digital World Acquisition shares are down 3.2% to $22.67 on Monday, versus a 52-week range of $9.84 to $175.
Photo: Courtesy of Gage Skidmore on flickr
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