On Friday (22nd March), shareholders approved a merger to float Donald Trump’s social media company on the stock market, possibly worth $3 billion to the former president. The windfall might be critical as Trump deals with the financial consequences of a series of legal proceedings against him, including a $454 million civil fraud judgement in New York.
DWAC opting to merge
Investors in Digital World Acquisition Corp., an investment company, opted to merge with Trump Media & Technology Group, which controls Trump’s “Truth Social” platform. The measure offers Trump with a possible windfall while he confronts legal challenges, but he may not be able to access the assets for some months.
It is unclear how and when these matters will be settled. Even if the purchase is finalised next week, Trump will be unable to sell or borrow against any of his combined firm shares for six months, according to previously agreed-upon rules.
Transaction to infuse millions of cash to Truth Social’s parent
The transaction is also expected to provide a critical $300 million cash infusion to Truth Social’s parent, Trump Media & Technology Group (TMTG). The social media firm lost $10.6 million in the first nine months of 2023, while generating $3.4 million in sales. It has been sustaining itself by borrowing $40.7 million in convertible promissory notes, which may be repaid with shares.
Based on how Digital World’s shares have recently traded, TMTG might be valued at $5.7 billion on an undiluted basis and $8.6 billion on a fully diluted basis, which includes warrants to be exercised and earnout shares to be issued.
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