Trump’s social media platform hit a roadblock on Tuesday, after the former Apprentice star and the blank-check acquisition firm which agreed to merge with his company were denied shareholder support for a one-year extension to complete the transaction, according to Reuters.
The businessman currently stands to lose a $1.3 billion cash injection for the Trump Media & Technology Group, which runs Trump’s Truth Social app, from Digital World Acquisition Corp, the special purpose acquisition company (SPAC), which was set to take the media company public.
The agreement is currently at a standstill as civil and criminal probes investigate the deal, with the process exceeding Digital World’s initial timeline due to the Securities and Exchange Commission (SEC) review.
Regulators are currently investigating Digital World documents on due diligence of potential targets other than Trump Media and Technology Group, links between Digital World and other entities, the identity of a series of investors, Digital World board policy meetings and trading procedures.
Digital World reportedly needs 65% of its shareholders to vote for the agreement to extend its lifespan by a year for the move to become effective. However, far fewer shareholders than required voted in favour of the deal.
Sources close to the matter said executives did not believe Digital World would muster sufficient support in time for the special meeting of shareholders on Tuesday.
The sources commented one option under consideration was to delay the vote in a move to rally additional support. Without a sufficient number of shareholder votes, the SPAC is set to liquidate on Thursday and return the cash raised in its IPO back in September 2021.
On the other hand, Digital World have the option to extend its life by up to six months without shareholder approval. Sources did not clarify if the company would pursue this option, however.