The funding partner for Trump Media & Technology Group announced that it will return $533 million of the $1 billion raised for the venture after investors canceled $467 million in commitments.
Digital World Acquisition Corp. (DWAC), a special-purpose acquisition company, revealed in a regulatory filing that it has received termination notices for $467 million of the funding. The remaining $533 million will be returned to investors. DWAC CEO Eric Swider characterized this decision as a “positive development,” as Trump’s media group focuses on developing a “sustainable business model.”
The loss of funding for DWAC represents a setback for the prospective merger with Trump’s media outfit, which operates Truth Social, a conservative-oriented social media service. The initial merger announcement in 2021 caused DWAC shares to surge by 800%, leading to comparisons with meme stocks.
However, the merger has encountered various obstacles, including regulatory scrutiny, since its announcement. “Despite how others may seek to characterize the [private investment in public equity, or PIPE] commitment cancellations, we want our shareholders to understand that these cancellations are a positive development in our ability to consummate the business combination,” stated Swider.
Plans to complete the merger
DWAC had approximately $1 billion worth of securities purchase agreements with institutional investors. According to the regulatory filing, these investors have sent termination notices for around $467 million. DWAC intends to “unwind the remaining balance” of the investment.
With the loss of funding, it is uncertain how Trump’s media group, Trump Media & Technology Group, will finance its operations after the merger. The original plan was for DWAC to provide TMTG with substantial funds upon completion of the merger.
However, the merger has faced multiple delays, including a recent one-year extension of the merger deadline approved by DWAC shareholders in September. Without this extension, DWAC would have faced liquidation last month. “Today’s announcement is an important step towards eliminating the PIPE—which TMTG believes would be in the best interest of TMTG’s equity holders—and completing our merger with DWAC as soon as possible,” stated TMTG CEO Devin Nunes. He did not provide specific details regarding how the elimination of financing would benefit the company’s shareholders.
Nevertheless, Swider mentioned in the statement that Trump’s media group has a “reduced need for capital” and a “commitment to growing a sustainable business model.”
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