Trump SPAC Digital World Acquisition (NASDAQ:DWAC) dropped as a deadline for financing for its plans to take Trump’s social media company and app Truth Social public was set to expire on Tuesday.
Investors in the SPAC’s $1 billion PIPE financing are in talks with DWAC CEO Patrick Orlando to try to get better terms that would move the risk to Trump and his backers and away from the investors, according to a Financial Times report.
Under a plan being discussed, investors may be allowed to convert preferred stock if the share price falls to as low as $2/share, according to the FT, which cited people familiar. The lower conversion price, down from $56/share, would dilute other shareholders, including Trump.
The report comes as DWAC has struggled to get the necessary 65% of shareholders needed to approve the combination with Trump’s media company and has adjourned a shareholder vote until Oct. 10 as it attempts to gain more votes. Only about 40% of holders have voted in favor of the transaction, according to the FT report from Saturday.
DWAC has an additional lifeline to survive after SPAC’s sponsor deposited $2.88 million to extend the time company needs to complete its deal by three months until Dec. 8. This is the first of two three-month extensions under the company’s governing documents. DWAC has warned previously that if the deal isn’t extended, the SPAC may be forced to liquidate.
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