The blank check company, which plans to make Trump Media and Technology Group and its Truth Social platform public, said on Tuesday that shareholders had voted to delay the deadline for its merger with Trump's firm for many months.
After the news was announced, shares of Digital World Acquisition Corp. closed more than 5 percent higher. The decision was made after a brief shareholder meeting. The paper company faces liquidation next month if it won't get a deadline extension, although the merger is already embroiled in other legal and financial obstacles. The Trump Media-DWAC deal is under the scrutiny of the Securities and Exchange Commission as well as federal criminal investigators.
The company, which hasn't made any revenue and already has $1 billion in financing at risk, had postponed the meeting several times during the last few months in order to get shareholder support. DWAC needed 65 percent of its shareholders support to pass an extension of the deadline to merge with Trump Media until September 2023. In a recent securities filing on Monday, the company said that there was "substantial doubt" about its ability to continue as a "going concern."
DWAC had earlier failed to get the necessary votes from its large group of retail investors. The meeting was put off many times. DWAC CEO Patrick Orlando then got an extension with a $2.8 million contribution from his company Arc Global Investments II.
The CEO has been trying to get votes on Trump Media's Truth Social platform, and even urged Trump Media CEO Devin Nunes and chairman, Donald Trump, to lend their support. The vote was very crucial for some of Trump's earlier supporters, who had shared on Truth Social and Reddit that they have invested lot of money in DWAC as a show of support to the platform.
If a merger were to take place, it would give hundreds of millions of dollars in funding to Trump Media, which has already faced many legal and financial obstacles. The deal has been put under a criminal probe and that delay has led to a loss of over $100 million in investment.
Trump had earlier said that he could take the company private. Internal documents have shown that Trump Media had also considered mergers and partnerships with other right-wing-friendly platforms, including Rumble and Parler.
The company has also been struggling with the fallout from a Trump Media executive's whistle blower complaint to federal regulators. William Wilkerson, a senior vice president at Trump Media, had filed a whistle blower complaint alleging securities violations in August. Wilkerson has described himself as one of its founders and said that he no longer believes in its viability.
In September, the company lost $138.5 million of the $1 billion in financing from private investors in public equity, also known as PIPE, to fund the merger. In recent days, DWAC lost one of its board members after Justin Shaner, CEO of Shaner Properties in South Florida, resigned, according to a securities filing.
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