Digital World Acquisition Corp. (DWAC) Delays Its Special Meeting of the Shareholders Till October 2022, Keeping the Financial Fate of Trump’s Media Initiatives in Limbo [Updated]

Digital World Acquisition

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Digital World Acquisition Corp. (NASDAQ:DWAC) is now suffering the consequences of its lackadaisical attitude in the run-up to a critical shareholder vote, thereby imperiling the financial health of the media-related initiatives of former US president Trump.

As a refresher, the SPAC Digital World Acquisition Corp. is slated to take the Trump Media & Technology Group (TMTG) public via a reverse merger, furnishing the former US president's media-focused entity with around $1.3 billion in much-needed cash, including $293 million in cash proceeds from the SPAC's IPO and around $1 billion raised via PIPE investments. TMTG intends to use these cash resources to build a conservative-oriented media machine, which includes plans to bolster Trump's newly-launched social media platform, dubbed Truth Social, as well as launch a subscription-based, "non-woke" video-on-demand service and initiate cloud-based offerings under the "tech stack" suite of products.

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Bear in mind that Truth Social desperately needs a cash infusion, judging from reports that the platform stopped paying web hosting service providers a few months back, leading to the accumulation of $1.6 million in payables.

Nonetheless, a speedy consummation of the merger agreement between Digital World Acquisition Corp. and TMTG has been complicated by a veritable onslaught of federal investigations around the circumstances surrounding this deal. For instance, the SPAC is under investigation by the SEC and FINRA for allegedly violating securities law by holding private discussions about a merger with TMTG as early as May 2021 but failing to disclose this pertinent information in its public filings. The SEC is also looking into reports that Rocket One Capital might have been privy to the impending merger between TMTG and DWAC before the public announcement.

This situation then prompted Digital World Acquisition Corp. and TMTG to delay the consummation of their merger agreement by a year, with a special meeting of the SPAC's shareholders called for the 06th of September to secure such an extension.

All Digital World Acquisition Corp. shareholders who owned an exposure to the stock on the 12th of August 2022 – the date of record for determining the voting eligibility – were required to vote on this merger extension proposal. Given that DWAC shares often trade like a meme stock and entail a high turnover, a lot of stockholders who held DWAC shares on the 12th of August no longer do so. This reduced the probability of such investors participating in the voting process. Coupled with a lack of effective communication from Digital World Acquisition Corp. management, the proposal could not secure the requisite 65 percent approval threshold by the 06th of September, thereby prompting the management to delay the tabulation of votes until 12:00 p.m. ET on the 08th of September. The meeting was subsequently adjourned till 03:00 p.m. ET and was then again delayed till 05:00 p.m. ET in order to allow additional time for the voting process.

This brings us to the crux of the matter. It seems that the frantic work by the management of Digital World Acquisition Corp. over the past two days did not pay off, with the special meeting of the SPAC's shareholders again adjourned till 12:00 p.m. ET on the 10th of October 2022 (Columbus Day). Readers should note that DWAC sponsors retain the right to pay $2.875 million in order to enforce a clause within the merger agreement that would allow a 3-month delay in the timeline by which the deal is to be consummated:

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If the Extension Amendment is not approved by the stockholders by September 8, 2022, ARC Global Investments II, LLC, the Company’s sponsor (the “Sponsor”), intends to contribute to the Company’s trust account an aggregate amount of $2,875,000, which is equal to $0.10 per share of Class A common stock issued in the Company’s initial public offering, to extend the time to consummate an initial business combination for a three-month period, until December 8, 2022.

Wccftech was able to participate in a passive capacity in today's shareholder meeting of Digital World Acquisition Corp. Consequently, we can confirm that the merger agreement between Digital World Acquisition Corp. and TMTG remains intact for now, and so does the financial lifeline for the former US president's media-focused ambitions.

At the time of writing, Digital World Acquisition Corp. shares are down around 1.5 percent in after-hours trading.

Update: Digital World Acquisition Corp. Sponsor Has Invoked the Clause That Allows for an Extension in the Merger Window

In a press release, Digital World Acquisition Corp. has notified that its sponsor has deposited $2.875 million in order to invoke the clause that allows for delaying the window by which the merger with TMTG is to be consummated without securing shareholder approval:

Digital World Acquisition Corp. (Nasdaq: DWAC) (“Digital World” or the “Company”) today announced that its sponsor, ARC Global Investments II LLC (the “Sponsor”), has deposited an aggregate of $2,875,000 (representing an additional $0.10 per public share) into the Company’s trust account for the benefit of its valued public stockholders. This additional contribution enables the Company to extend the date by which the Company has to complete its initial business combination for an initial three-month extension from September 8, 2022 to December 8, 2022. This is the first of two three-month extensions available under the Company’s current governing documents.

The statement goes on to note:

The Company is also further adjourning its special meeting of stockholders (the “Special Meeting”) from September 8, 2022 to 12:00 p.m. Eastern Time on Columbus Day, which falls on Monday, October 10, 2022.

Digital World Acquisition Corp. shares are up over 3 percent in pre-market trading right now.

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