Digital World again fails to garner enough votes to extend Truth Social merger

Former President Donald Trump has failed to win another vote — this time, his social network Truth Social was being counted on for cash from the shareholders of an investment ally.

Digital World Acquisition Corp., a special-purpose acquisition company, said Thursday that it has not yet received enough shareholder votes to extend the deadline for a merger with Trump’s start-up – unlocking $1.3 billion in funds raised. A necessary step to do.

The company was scheduled for liquidation on Thursday unless its investors approved the expansion or the company’s sponsor paid to push back the deadline.

But the head of Digital World, Patrick Orlando, said late Thursday that the company would instead postpone a long-awaited meeting until October 10 without providing further details, indicating that the company still has enough shareholder support to gain. Shaking hands and feet.

Shanghai-based investment advisory firm Arc Capital, which funds and sponsors Digital World, is paying $2.8 million to give the company another three months to seal the deal without shareholder approval, the company said in the filing. can.

That too probably isn’t enough time. An ongoing investigation by the Securities and Exchange Commission and federal prosecutors has put the merger on hold indefinitely. In an SEC filing Wednesday, Digital World reprinted an item from a pro-Trump blog post urging the SEC to “end its investigation.”

Digital World’s charter allows its executives a further three-month extension thereafter at the same cost to complete the deal. If the merger doesn’t happen by then, Digital World said it could be forced to liquidate, return all its money to investors and leave Trump’s operations with nothing.

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The loss has once again put the main proponent of Trump’s post-presidency business ventures into doubt. The digital world has long been known as Truth Social’s central funding source, and if that money is gone there is no clear financial option.

Trump’s company said it is working to sell ads on Truth Social, but has yet to report any revenue. In May, Digital World said in an SEC filing that Trump’s company was closing debt including $15 million in Bridge Financing since earlier this year, which could allow it to pay its bills until at least April 2023. Is.

Trump tried to play down the issue this weekend, posting on Truth Social, “I don’t need financing, saying ‘I’m really rich!’ But the company is already facing a dispute with a conservative online-services company over alleged unpaid bills.

Trump’s Truth Social Moves Closer to a Financial Rock

Digital World needs 65 percent of its shareholders to vote in favor of giving the deal another year. But there was not enough turnout, Orlando said.

Orlando and other investors campaigned heavily in recent days for substantial shareholder support, including from TruthSocial, a Twitter clone that has suffered technical issues and low activity in the more than six months since its launch.

“We’re in the middle of this potentially historic vote, and I just want to make sure that everyone is following each other ‘re-true,’ ‘quote-truth,’ and making sure there is no DWAC Stockholders are not left behind,” Orlando said in a Truth Social video last week, using the platform’s terms for “retweet” and “quote tweet.”

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Orlando said the meeting was originally called for Tuesday, but was postponed so the company could register more votes. On Thursday, the meeting was adjourned twice before Orlando spoke at 5 p.m., saying the meeting would be postponed once again until October 10.

Digital World’s share price rose nearly 1 percent to $23 on Thursday, and fell in after-hours trading after the postponement. Shortly after its market debut, it is down almost 90 percent from its peak of $175.

Shortly before adjourning the meeting, Orlando wrote on Truth Social that “important information” would be broadcast to the site later on Thursday. Some people on the site reacted with concern to the move. “This is not good. They should have at least raised questions,” wrote one user.

Trump’s disastrous launch of Truth Social raises doubts about its long-term viability

Truth Social has become Trump’s main Internet megaphone, although his audience there is about 95 percent less than Twitter, which he achieved before losing the White House.

On January 6, 2021, Trump was banned from all major social networks after his supporters stormed the US Capitol over false allegations of election fraud.

Truth Social has other things to worry about beyond its financial existence. Google told Trump’s company last month that it would not allow Truth Social to go live on its Android App Store unless it could show it was effectively moderating posts on the site, including physical threats and violence. incitement, a Google spokesperson told The Washington Post. , Both companies have said that they are working on the issue.

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Google sent its notice to the company nearly a week after an armored gunman tried to sabotage the FBI’s Cincinnati field office, an agency Trump has regularly discredited. Ricky Schiffer, the suspect police said was killed in a shootout, was a prolific user on Truth Social, urging followers to “kill” [FBI agents] Seeing it.”