SHAREHOLDERS approved a merger Friday (Mar 22) to list Donald Trump’s social media venture on the US stock market, providing a potential financial lifeline to the former president as he faces possible seizure of his properties.
After many previous delays, investors voted to approve the merger of Digital World Acquisition and Trump Media & Technology Group (TMTG) – owner of the Truth Social platform, company officials said on a webcast of the vote.
The action could potentially provide Trump some US$3 billion, as he faces a US$454 million court payment for his New York fraud case, although he may not be able to access the funds for several months.
The ex-president, who is running once-again for the White House, started Truth Social after he was booted from Facebook and Twitter in January 2021.
The social media sites took the unprecedented step of banning a sitting president after a mob of Trump’s supporters attacked the US Capitol, following Trump’s repeated calls for his 2020 election loss to Joe Biden to be overturned.
His accounts have since been restored.
Trump’s expected bounty stems from millions of shares he owns in Trump Media that are now worth billions with Friday’s vote to combine with Digital World, a shell company created specifically to combine with an operating business.
However, such deals require principal shareholders such as Trump to hold the equity for six months before selling.
Looming deadline
Shares of Digital World – which is expected to be renamed in Trump’s name – ended Friday’s session sharply lower at US$36.94, down 13.7 per cent.
DWAC was set up as a special purpose acquisition company, or SPAC, a shell company that goes public with the aim of merging with an operating entity.
DWAC’s investors prior to the deal included a relatively small share of institutional investors, according to public filings that suggest most holders are individual investors.
The transaction drew criticism Friday from the watchdog Citizens for Responsiblity and Ethics in Washington (CREW), which pointed out that the largest holder in DWAC with about two percent was Susquehanna International Group, which is led by Republican donor Jeff Yass.
“There’s a strong public interest in knowing the investors behind this deal that is poised to provide Trump a massive financial lifeline,” the group said on X, the former Twitter.
Trump, who has clinched the Republican nomination for this year’s presidential election, is appealing his US$355 million penalty, plus interest, after a New York court ruled that he, his sons and their family business lied for years about the value of his assets, deceiving banks and insurers.
A 30-day grace period to put up the money expires Monday, raising immediate questions about how Trump will respond.
According to US media reports, New York Attorney General Letitia James has taken some preliminary steps to seize Trump assets in New York, but additional court actions would be needed if the properties were going to be taken.
“This transaction has been kicking around for a while,” Usha Rodrigues, an expert in SPAC transactions at the University of Georgia School of Law. “The reason this closed is because he needs the money.”
Trump fury
Trump lashed out at prosecutors earlier Friday, and claimed again without evidence that the New York case is a political conspiracy orchestrated by Biden, his expected opponent again in November.
“No trial, no jury, no crime, no victim,” Trump wrote on Truth Social. “Only a crooked judge and a corrupt, Trump-hating attorney general, who takes her orders directly from the White House.
“Election interference at a level never seen before!”
Despite the real-estate mogul’s US$2.6 billion estimated net worth – and his own claims of having cash on hand – his lawyers say that it has been impossible to come up with the US$454 million bond, due Monday.
Typically, such bonds would be underwritten by an insurer or specialized bond company.
But Trump’s lawyers say that after approaching 30 such companies, none will take the ex-president’s real-estate holdings as collateral. AFP
