A request to extend the deadline for the merger between former President Donald Trump’s Truth Social platform and a special purpose acquisition company was denied by shareholders, according to Reuters, signaling more trouble for the deal, which is already the subject of multiple federal investigations.
According to Reuters, Digital World Acquisition Corp (DWAC), the Nasdaq-listed blank check company that has agreed to acquire Truth Social’s parent company Trump Media & Technology Group (TMTG), and take it public, failed to garner the required 65% votes to extend the completion of the deal by an additional year.
The corporation recently stated that the voting procedure has been difficult because the majority of its shareholders are individuals whose votes must be gained through their brokers.
The company has requested an extension until September 8, 2023 to complete the transaction, which goes beyond the standard two-year limit for a SPAC to complete an acquisition, which ends on Thursday.
The final vote tally will be published Tuesday, but according to Reuters, the company’s leaders are already considering alternatives, including a unilateral six-month extension without shareholder approval, because they believe they will meet the 65% threshold.
If DWAC does not resolve the matter by Thursday, September 8, it will be obliged to liquidate its shares and refund the funds raised in its initial public offering.
LARGE NUMBER 18.86% That is how much DWAC shares have dropped in the last month as a result of reports that Truth Social has failed to pay more than $1.6 million in vendor bills.
IMPORTANT QUOTE
“Without the Extension, the Board thinks that there is a significant risk that we may not, despite our best efforts, be able to consummate the Business Combination on or before the Termination Date,” the business wrote in a Securities and Exchange Commission filing last month. If that happened, we’d be forced to liquidate.”
IMPORTANT BACKGROUND
Last month, the business announced plans to seek a one-year extension from its shareholders, referring to at least two federal investigations into the potential acquisition. The SEC is looking into allegations that DWAC executives met with Truth Social’s parent business prior to the blank check startup becoming public.
The purported meeting would be in violation of regulations that prohibit SPACs from entering into transactions or merger agreements before going public. A federal grand jury in New York summoned two members of the DWAC board of directors in a separate inquiry in June.
Some of the same records sought by the SEC have been requested by the grand jury investigation, as well as information on interactions with “several individuals” and information about Rocket One Capital, a Miami-based private equity firm.