Trump Media & Technology Group’s financing partner said it would return the remaining $533 million of the $1 billion it raised to fund the venture after investors canceled $467 million in commitments.
Digital World Acquisition Corp. (DWAC), a so-called special-purpose acquisition company, said in a regulatory filing that it had received cancellation notices from investors for $467 million of the financing. The remaining $533 million will be returned to investors. DWAC CEO Eric Swider said in a press release that the decision was a “positive development” as Trump’s media group focuses on developing a “sustainable business model.”
DWAC’s loss of funding appears to be a step backwards for the planned merger between the company and Trump’s media company, which operates Truth Social, a conservative-leaning social media service. When the merger was first announced in 2021, it sparked an 800% surge in DWAC shares, prompting comparisons to meme stocks.
The stock, which topped $100 in 2022, was at $15.40 before trading began on Friday.
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Since then, however, the merger has faced numerous obstacles, including regulatory scrutiny.
“[D]regardless of how others try to characterize it [private investment in public equity, or PIPE] “We want our shareholders to understand that these cancellations represent a positive development in our ability to consummate the business combination,” Swider said in the statement.
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Plans to complete the merger
DWAC had securities purchase agreements worth about $1 billion with some institutional investors, with the company saying in regulatory filings that those investors had sent it termination notices for about $467 million. It said it would process “the balance” of the investment.
Given the loss of funding, it is unclear how Trump’s media group, called Trump Media & Technology Group, would fund its operations post-merger. The plan called for DWAC to provide TMTG with a substantial pool of capital upon completion of the merger.
However, this merger has been delayed several times, most recently when DWAC shareholders agreed in September to extend the merger deadline between the two companies by one year. Without this extension, DWAC would have faced liquidation last month.
“Today’s announcement is an important step toward eliminating the PIPE – which TMTG believes would be in the best interests of TMTG’s shareholders – and completing our merger with DWAC as quickly as possible,” TMTG CEO Devin Nunes said in Thursday’s statement . He did not provide any details as to why the loss of funding would benefit his company’s shareholders.
However, Swider noted in the statement that Trump’s media group has “reduced capital needs” and a “commitment to building a sustainable business model.”