Donald Trump-Linked Media Company Is Nearing a $50 Million Financing Deal: Report
By Jace Dela Cruz
Feb 09, 2024 03:39 AM EST
Feb 09, 2024 03:39 AM EST
Digital World Acquisition Corp., the blank check company set to take former President Donald Trump's social media platform public, is reportedly on the brink of securing a $50 million financing deal.
Citing people familiar with the matter, Reuters reported that the agreement is based on convertible notes and intended to bolster DWAC's fund as it progresses towards finalizing its merger with Trump Media & Technology Group (TMTG), the parent company of Trump's social media platform, Truth Social.
Sources told Reuters that Anson Funds, All Blue Capital, and Mangrove Partners are among the investment firms offering to purchase the convertible notes on offer. But they caution that the timing and composition of the deal may still change.
Last month, Digital World Acquisition disclosed plans to raise $50 million in convertible notes after scrapping a $1 billion financing arrangement, known as a private investment in public equity, or PIPE. Digital World raised the $1 billion PIPE in 2022 but failed to complete the merger with TMTG before the deadline.
In October 2021, Digital World agreed to merge with TMTG but failed to complete it before the scheduled deadline as financial regulators investigated Digital World's disclosures to investors.
The delay in completing the merger by September 2022 gave the PIPE investors who agreed to invest in the newly merged company the right to walk away or cancel their commitments if they wanted to.
Last August, an amendment to the TMTG and Digital World deal called for the unwinding of the PIPE, and this gave Donald Trump new shares in Digital World with more voting power.
It would also leave Digital World with the $293 million cash it had raised in its initial public offering in September 2021, which is set to go to TMTG once the merger is completed. However, this money could also get smaller if investors opt for redemptions.
The merger between Digital World Acquisition and TMTG encountered some challenges in its bid to complete it. It has been the target of the US Department of Justice and the Securities and Exchange Commission's (SEC) investigations, leadership changes, and board restructuring.
Digital World's investors approved a one-year extension in September to complete the merger. The company is now waiting for clearance from the SEC to allow its shareholders to vote on the merger.
Digital World will reportedly pull out $10 million from the $50 million convertible note raise for its immediate use and utilize the rest to complete its deal with TMTG.
On Thursday, the shares of Digital World ended trading up 4.4% at $47.66, almost threefold since January 15, or when Donald Trump won the Iowa Republican caucuses. Investors likely believed that the former president's re-emergence as a significant politician would make Truth Social more valuable.
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