Trump’s SPAC deal thrown into limbo with looming extension deadline

If an extension cannot be reached by then, SPAC could be forced to liquidate and return the nearly $300 million it raised in 2021 to investors.

A SPAC is basically a publicly traded skeletal company with no major operations of its own that plans to acquire a private entity using the cash raised from its IPO. The private company – in this case TMTG – then takes over the listing of SPAC on the stock exchange, making the deal an alternative route to the public listing of the shares in the United States.

A liquidation by Digital World Acquisition would cap off what has already been a frantic race for SPAC and TMTG, which operates Trump’s Truth Social and is led by Devin Nunes, the California Republican who left Congress in January to become the CEO of the society.

Since closing the 2021 deal, Digital World Acquisition has been subject to stock-like moves in the market thanks to the group of retail investors who bought stock to support the former president’s efforts to create the own version of Twitter. The deal was also questioned by various government agenciesincluding the Security and Exchange Commission and the Financial Sector Regulatory Authority.

That would separately raise a whirlwind of new questions about what’s to come next. former president’s companyincluding who – if anyone – will fill the void as funders of TMTG and Truth Social.

Launched six months ago, Truth Social has largely failed to generate the kind of excitement conservatives were hoping for when Trump’s team unveiled the app. The company has also encountered a host of other issues, including reported feuds and clashes with a supplierthe US Patent and Trademark Office and Google. But there were reasons for optimism, including a increase in downloads of the app in the weeks following the FBI’s search for Mar-a-Lago.

Trump signals that he is not worried, writing in a September 3 article on Truth Social, “I don’t need financing, ‘I’m really rich!’ Private company anyone???

“Truth Social continues to grow rapidly, driven by extraordinary user engagement and the recent launch of ads on the platform,” a TMTG spokesperson said in a statement to POLITICO. “TMTG will continue to cooperate with all stakeholders in connection with its planned merger, and expects SEC staff to expeditiously conclude its review without political interference.”

Digital World Acquisition may have even more levers to pull to finalize the deal. The leaders themselves could extend the duration of the SPAC for another six months, according to Reuters, which reported earlier that the votes in favor of the extension were well below the required threshold.

Investors do not seem optimistic about the deal’s prospects. On Tuesday, shares of Digital World Acquisition fell 21%. The stock recouped some of the losses but still ended the day down 11%.

A spokesperson for Digital World Acquisition did not respond to a request for comment.

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