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NEW YORK (Reuters) – Digital World Acquisition Corp (DWAC), the blank-check acquisition company that plans to merge with former U.S. President Donald Trump’s social media firm, said on Thursday it would return to investors $533 million raised for a cash infusion in the deal, after some already backtracked on another $467 million of commitments.
The development is the nail in the coffin of the $1 billion investment that DWAC had raised for the merger with Trump Media & Technology Group (TMTG), which runs the Truth Social platform. It raises further doubts about whether the former U.S. president will go ahead with the deal, now that TMTG no longer stands to receive $1 billion if and when it closes.
The move leaves DWAC with the $293 million cash it had raised in its initial public offering in September 2021, which is set to go to TMTG upon the deal’s closing. That pot of money could also shrink if investors opt for redemptions.
It was unclear how TMTG will fund itself if the deal does not go through. TMTG previously raised $22.8 million in financing from private investors, Reuters reported last October.
DWAC and TMTG have added an option to their amended merger agreement that allows either side to terminate the merger deal between Oct. 31 and Nov. 21 if their boards no longer believe the merger will benefit shareholders, according to an Oct. 2 regulatory filing. According to a Feb. 2, 2021 services agreement, Trump controls 90% of TMTG.
Representatives from DWAC and TMTG did not immediately respond to requests for comment.
Digital World has faced challenges since the October 2021 announcement that it was planning to acquire TMTG. It has been the target of investigations by the U.S. Department of Justice and the Securities and Exchange Commission (SEC); ousted its chief executive, and shook up its board.
In September DWAC Investors voted to give up to a one-year extension to complete the TMTG deal, the deadline for which had been delayed several times.
Shares of Digital World were trading at $15.70 on Thursday, down .98% on the day and down from a peak of around $97 a share in March, 2022.
