(Robert Jonathan, Headline USA) The continued viability of Truth Social may or may not be hanging in the balance with a looming shareholder vote.
Trump Media & Technology Group, the Twitter rival’s parent company, and Digital World Acquisition Corp. are or were set to merge, but the deal announced back in October 2021 has yet to finalize.
The closing is now scheduled for Sept. 8, unless enough shareholders go along with a DWAC recommendation to vote on Tuesday to extend the deadline by another year.
If the merger ever happens, the new tech entity is reportedly projected to be valued at a range of $875 million to $1.7 billion. The deadline for the high-finance transaction to consummate has reportedly been extended five times already.
“If the vote fails, Digital World will be required by law to liquidate and return $300 million to its shareholders, leaving Trump’s company with nothing from the transaction,” the Washington Post reported on Sept. 2.
Digital World, which is a so-called special purpose acquisition company that enables the merged organization to go public, needs yes votes from slightly less than two-thirds of the shares owned by approximately 400,000 shareholders.
As a practical matter, getting the necessary votes may be problematic, the Post noted, given the SPAC’s unique composition.
“Digital World’s shareholder base is made up largely of small-time ‘retail’ investors, making it harder for the company to boost shareholder participation in critical votes. [Univ. of Florida finance professor Jay] Ritter said he suspects these investors, many of whom bought shares out of love for Trump or loyalty to his brand, may not be paying attention as the liquidation deadline approaches.”
About the merger, Ritter also opined that it has “been pretty much unprecedented in terms of all of the glitches. The deal does seem to be running out of time. You can’t just keep getting extensions forever.”
According to the Post, Digital World has allegedly encountered various issues with regulators including “an $18 million settlement to resolve charges that it had misled investors and given false information to the Securities and Exchange Commission.”
Trump Media has reportedly blamed SEC regulators in the Biden administration for the stalled deal.
The start-up company, whose CEO is former GOP Congressman Devin Nunes, has previously sued the Post for defamation in the context of the left-wing news outlet’s coverage of the pending merger.
Former President Donald Trump is still very active on Truth Social.
Ever the salesman, on August 28, he wrote that “I believe that Truth Social is the greatest & ‘hottest’ form, system, & platform of communication in America, & indeed the world, today. That’s why I use it — there is nothing that comes even close!!!”
The Post elucidated, however, that “Trump, who would retain his 90 percent ownership of Trump Media if the deal falls apart, has yet to make mention of the shareholder vote on his own Truth Social account.”
The momentum behind Truth Social perhaps may have lessened once Elon Musk bought Twitter in the name of free speech.
Pursuant to a May 2022 SEC filing by DWAC, “President Trump is generally obligated to make any social media post on Truth Social and may not make the same post on another social media site for 6 hours. Thereafter, he is free to post on any site to which he has access.”
Perhaps in the best of circumstances, it would be challenging for any of Twitter’s less-established social media competitors to catch up, even with Trump on board.
Truth Social, for example, reportedly has about two million or less users as compared to an estimated 400 million or more on Twitter.
In November 2022, Musk reactivated Trump’s Twitter account, which has only sent out one post on the platform so far, the historic Fulton County mugshot.
Digital World’s share price is currently about $16, down from its peak of $175.
In an SEC filing dated July 14, 2023, DWAC explained, in part, that “If we liquidate, our public shareholders may only receive $10.24 per share, and our warrants will expire worthless.”
In the announcement of Tuesday’s special shareholder meeting, DWA CEO Eric Swider asserted the following:
“…Our SPAC is at a defining crossroads. The proposal to approve the Extension, giving us time to potentially complete the business combination with Trump Media & Technology Group Corp., isn’t just a formality; it’s a decision deeply rooted in our shared vision for freedom of speech, innovation, and growth.
He added that “As the Special Stockholders Meeting approaches, I earnestly urge each stockholder to cast their vote in favor of this extension. Every vote is essential for our ability to progress with the merger.”
Swider separately told the Post in statement that its latest report was “inaccurate or wildly misleading.”
A Trump Media spokeswoman also condemned the Post report as adding to “its heaping pile of bias.”
