Signal company

Trump’s social media company suffered setback in IPO deal: NPR

Former President Trump The following group was created: Trump Media & Technology GroupIt includes Truth SocialAfter his expulsion, he is now a free man. Twitter.

Stefani Reynolds/AFP via Getty Images

Hide legend

Toggle legend

Stefani Reynolds/AFP via Getty Images

Former President Trump The following group was created: Trump Media & Technology GroupIt includes Truth SocialAfter his expulsion, he is now a free man. Twitter.

Stefani Reynolds/AFP via Getty Images

Another problem former President Trump has for social media companies: It’s It’s currently unable to list on the stock exchange, which would allow it to raise more money than it needs to keep operating.

Trump Media And Technology GroupThe includes the social app Truth which it launched earlier in the year and had planned to list on the Nasdaq stock exchange through a complex merger known as the SPAC merger.

But the deal is currently undergoing regulatory and legal review. Securities And Exchange Commission Nevertheless, it has not yet signaled its approval.

SPAC, which is the organization that will help with the stock listing, is what it calls Digital World Acquisition Corp. It now requires a listing extension, he said. Thursday. The Company had difficulty securing the support of a sufficient number of shareholders to meet the deadline.

Here You can read more about the current situation here.

What is it about?

Instead, the traditional IPO is the better option. Trump Media And Technology Group A blank check company, which is already listed on NASDAQ, has been chosen to merge with the company. Nasdaq.

These There are many offers available that were popular in recent years when interest rates were close to zero. In effect, they give private companies a shortcut to going public – requiring less transparency than traditional IPOs.

The asset Last year, DWAC and company (TMTG) announced their merger. October, However, it must be approved by regulatory authorities and shareholders.

Since then, however, both companies have suffered several setbacks since then.

In June, a grand jury in New York subpoenaed the TMTG and, according to the DWAC, “certain current and former TMTG personnel also recently received individual grand jury subpoenas.”

In addition, DWAC and certain members of its board have been subpoenaed by the SEC. This investigation relates to PSPC’s communications, due diligence and financial transactions.

In File A, the SPAC said “these subpoenas and the underlying investigations by the SEC and the U.S. Department of Justice…could delay, impede, or materially prevent the completion” of the deal.

Faced with DWAC’s CEO setting a deadline for the deal to close, Patrick Orlando asked the company’s shareholders – many of whom are individual investors – to approve a one-year extension.

But investor support has been insufficient for the company, so a special meeting was initially scheduled. Tuesday It was quickly adjourned and two subsequent attempts to reconvene resulted in quick adjournments but no announcement of the results.

Thursday afternoon, Orlando The meeting will resume at noon. October 10.

“We are working diligently to register all the votes that continue to come in from our shareholders and are adjourning this meeting to give shareholders – whether small, medium or large – more time to vote,” he said. .

If enough shareholders refuse to agree to the deal extension, the deal’s sponsors say they will add more money to the front company’s bank accounts, giving them three months to extend the deadline. . If the deal is not finalized, the sponsors have the possibility of financing 3 additional months.

What brought us here?

When former President Trump founded the Trump Media & Technology Group It was almost a year ago. He acknowledged that it would be “difficult and expensive to build a new platform” that could compete with Facebook and Twitter.

“It should be extremely well funded,” he said.

Digital World Acquisition Corp. The company has $293 million in cash and completing the SPAC merger would give it $1 billion in additional funding from private investors.

In the days that followed, investors expressed support for the combination. Last October, DWAC stock price soared to $175 per share

But Fast a year has passed and shareholders of the SEC and DWAC have not agreed to the deal.

After both companies admitted they were under regulatory and legal scrutiny, DWAC shares fell precipitously. Today, it is currently trading at $23 per share.

The launch of the Truth Social app has been delayed and is not yet available on the website’s Android operating system.

What happens next?

Trump Media And Technology Group, the parent company of Truth Social, has entered into a merger agreement with Digital World Acquisition Corp. last October.

Chris Delmas/AFP via Getty Images

Hide legend

Toggle legend

Chris Delmas/AFP via Getty Images

Trump Media And Technology Group, the parent company of Truth Social, has entered into a merger agreement with Digital World Acquisition Corp. last October.

Chris Delmas/AFP via Getty Images

PSPC mergers must be completed within a defined time frame. For the moment, it looks difficult. Trump’s social networks to finalize the merger

If the agreement has not been approved on time and there is no extension. DWAC would terminate the agreement. President Trump’s media companies should find new ways to raise funds.

In a recent article on Truth Social, the difficulty of this task was downplayed by the former president.

“I don’t need funding,” he wrote. “Private company anyone???”

And as for the outstanding legal issues?

“Theoretically, they shouldn’t need to be fully resolved for this deal to happen,” said Michael Ohlrogge, associate professor of law at New York University. “The SEC’s greatest interest is to ensure that risks are fully and clearly disclosed to shareholders.”

DWAC urged SEC officials to complete their investigation. Orlando The company said it is cooperating with regulators.

“We had some delays,” he said. “It’s slower than expected, but we fight every day, work every day to get the ball going.”