The future of former President Donald Trump’s social media platform remains in doubt after a cash-rich company that it had hoped to merge with announced Tuesday that it needed a couple of more days to get shareholder support to extend the deadline for completing the deal.
Digital World Acquisition had scheduled a meeting Tuesday to announce the outcome of the shareholder vote to extend the deadline for completing the merger by another year. But moments after the meeting started, Patrick Orlando, Digital World’s chief executive officer, announced that he was adjourning the meeting to Thursday to allow more time for investors to vote.
If the special purpose acquisition company, or SPAC, cannot get 65% of shareholders to approve the extension, it might be forced to liquidate and return to shareholders the nearly $300 million it raised in an initial public offering in September.
But the sponsor of the SPAC, which is also led by Orlando, said in a Tuesday afternoon regulatory filing that a liquidation might be avoided even if shareholders do not approve the one-year extension. The filing said the sponsor was prepared to provide Digital World with an additional $2.8 million to give it an extra three months to complete the deal.
The SPAC’s charter allows the sponsor to unilaterally extend the period for completing a deal if it contributes money to the special bank account that holds the dollars raised in the IPO.
The potential collapse of the deal raises questions about the future of Trump Media & Technology Group and its flagship social media app, Truth Social, the Twitter-like platform that Trump backed after Twitter barred him from posting after the Jan. 6, 2021, attack on the Capitol.
Digital World, which went public a year ago, had given itself until Thursday to complete a merger with another company. Dual investigations into the deal by federal prosecutors and securities regulators have bogged down the merger and led to the delay.
Without the cash infusion from Digital World, Trump Media may need to raise additional financing or find another merger partner.
Meanwhile, one of Trump Media’s main business partners, Rumble, is moving closer to completing its own merger with a SPAC. On Sept. 15, CF Acquisition Corp. VI is scheduled to announce whether its shareholders have approved a merger with Rumble, an online video platform that offers a conservative alternative to YouTube.
After the announcement, shares of Digital World were down about 15%. They closed at just above $22, a drop of more than 11% on the day.