supervisory authority identified
Trump’s “Truth Social” IPO threatens to collapse
09/06/2022, 11:00 p.m
The debut on the stock market could backfire for Trump’s social network “Truth Social”. The reason is the springboard, the Digital World Acquisition company. The takeover vehicle advocates postponing the acquisition next year. Now it’s up to the shareholders.
The IPO of Donald Trump’s newly founded social network “Truth Social” is in danger of failing. The takeover vehicle Digital World Acquisition, which wants to help the operator of the Twitter alternative to go public, is concerned about the approval of the shareholders for the necessary extension of the takeover period for the Trump Media & Technology Group by twelve months.
Digital World boss Patrick Orlando extended the voting period by two days on Tuesday. He needs a majority of 65 percent to prevent the company from being liquidated. Digital World needs more time because the US Securities and Exchange Commission blocks the takeover of TMTG. But Digital World is having trouble getting investors to vote. Most are private investors who are difficult to reach.
As of Monday evening, Digital World was far from the required approval rating, several insiders told Reuters news agency. It’s about $1.3 billion that TMTG is supposed to receive from Digital World in the course of the “backdoor IPO”. Digital World is an IPO that has raised $293 million in search of a takeover target. New investors have pledged another billion dollars in the course of the IPO.
Much Fewer Followers on “Truth Social”
However, the circumstances under which Digital World selected the Trump company are the subject of civil and criminal investigations. The announcement caused a lot of hype among supporters of the ex-US President and investors at Digital World. The SEC has put the transaction on hold due to the ongoing investigation.
Trump had communicated his views during his tenure primarily via Twitter. However, in the course of the riots of his supporters in the Capitol in January 2021, the platform excluded Trump. He has been using Truth Social since April. He has four million followers there – far fewer than the 89 million who subscribed to his posts on Twitter.
SPACs have a finite lifetime if they fail to complete an acquisition. Normally, Digital World would have to return the money collected from shareholders by Thursday. If the vote is defeated, the management can continue to operate Digital World for six months. But the promise of the new “Truth Social” investors over a billion dollars is only valid until September 20th.
Investment bankers are also currently trying to get her to extend it, insiders said. Without the IPO, further financing of TMTG is open. According to Digital World, the money will last until April 2023. TMTG said last week that “Truth Social” was on a strong financial footing.