The special-purpose acquisition company trying to take Trump Media & Technology Group public will pay nearly $3 million to get three more months to complete the deal, tightening an already narrow path for the merger.
fell 0.3% to $23.39 a share in Friday afternoon trading after it confirmed late Thursday that it failed to get investor approval for a one-year extension of its merger deadline. The stock has swung between $20 and $25 most of this week.
The confirmation had been expected after the SPAC adjourned its shareholder meeting for two days on Tuesday and said in a filing that it was prepared to pay for the three-month extension.
Digital World Acquisition management can pay another $3 million in December for a further three months to complete the merger. Many analysts say it might need longer than that to resolve investigations by the Securities and Exchange Commission and federal prosecutors into how the deal came about and communications between both sides before their merger agreement.
“The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors,” Trump Media & Technology Group said in a Thursday statement. “The SEC needs to set aside any improper political considerations and bring its review to a swift conclusion.”
The SEC didn’t respond to a request for comment.
The SPAC and former President
social-media firm, which operates
alternative Truth Social, would still have to disclose a lot of information in regulatory filings that would be subject to SEC approval before shareholders could hold a final vote on approving the deal.
The SPAC needed 65% shareholder approval by Thursday to get a one-year extension but had trouble getting individual investors to vote. It is an example of investors failing to do something simple under their control and costing themselves money, analysts say—and a downside of having a stock driven by retail-investor speculation, because many of them are unfamiliar with shareholder meetings. The stock fell in recent weeks as the initial deadline approached.
The SPAC’s creators are depositing the nearly $3 million into its trust account, which holds roughly $290 million.
Merger and liquidation deadlines are common for SPACs, which typically have about two years to do a deal or else they must return the cash they raised to shareholders. Digital World Acquisition Chief Executive
adjourned this week’s shareholder meeting several times to give shareholders more time to vote on the one-year extension before announcing the three-month move. He finally adjourned the meeting until Oct. 10.
The blank-check merger could give the former president’s company up to $1.3 billion in cash. Mr. Trump has said on Truth Social recently that he doesn’t need financing and hinted the company could try to raise money privately. The company raised about $20 million in convertible bonds last year and an additional $15 million in the first quarter of 2022.
Also called a blank-check company, a SPAC is a shell firm that raises money from investors and publicly lists on an exchange with the sole intent of merging with a private company to take it public. After regulators approve the deal, the company going public replaces the SPAC in the stock market. Such mergers have become popular alternatives to traditional initial public offerings in the past few years, though they have been hit hard by this year’s market volatility.
Write to Amrith Ramkumar at email@example.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8