Donald Trump’s money-losing app Truth Social has been spared from a possible shutdown in the coming weeks after investors voted to extend a deadline on a deal to give the company a major cash injection.
More than 65% of investors in Digital World Acquisition Corp., — the blank-check company that has agreed to acquire Truth Social — voted on Wednesday to give the merger until September 2023 to close.
The fledgling social network will be forced to raise additional cash to keep operating in the meantime, during which the the so-called special-purpose acquisition company, or SPAC, will seek approval from the Securities and Exchange Commission for the deal, sources told The Post.
Shares of DWAC — which had plummeted from roughly $28 per share to $22 per share after Donald Trump announced his candidacy for President last week — rose more than 10% to $24 per share on Tuesday.
The deal’s extension is a financial relief for Trump, who owns a 90% stake in Truth Social. If the SEC clears the deal, it will infuse the money-losing social network with $1.25 billion in cash.
But Truth Social also could complicate his presidential campaign after Elon Musk over the weekend gave the nod to reinstate Trump’s Twitter account.
That’s because Trump’s contract with Truth Social reportedly requires that he make any social-media posts available exclusively on Truth Social for eight hours before posting them on another network.
The vote came just days after Trump won a poll posted by Twitter CEO Elon Musk asking if the ex-president’s account should be reinstated. Trump encouraged his Truth Social followers to vote after Musk posted a Twitter poll Saturday evening in which Trump prevailed.
Nevertheless, Trump later assured his Truth Social audience he saw no reason to go back to Twitter, saying, “don’t worry, we aren’t going anywhere,” and, “Truth Social has taken the place for a lot of people and I don’t see them going back onto Twitter.” Indeed, experts say a reactivation of Trump’s Twitter account could be seen as devaluing his Truth Social presence, opening him up to legal liability.
“If it’s going to look, later on, that he never had that intention [of remaining off Twitter] but he just wanted to convince people that they should go ahead and close [the SPAC deal] that’s kind of a textbook securities fraud lawsuit,” Columbia Law School professor Eric Talley told Semafor.
Last year, the SEC launched a probe into whether DWAC’s founders had advance knowledge of its target company before listing its shares in September 2021 — a violation of securities laws. The Commission needs to drop its investigation before the deal can be consummated.
The vote comes after Patrick Orlando, the CEO of DWAC, public took desperate measures to keep the deal alive, The Post reported last week. Orlando had called investors with as few as 20 shares each to urge them to vote for the deal after being forced to reschedule the vote six times, sources said.
SPACs are shell companies that raise money in the public markets and then use that money to merge with a private company and take it public. If the SPAC can’t consummate a deal, it must return all the funds to investors.
Given the deal continues to overcome hurdles, insiders say they are optimistic it will eventually get done.
“I just wouldn’t bet against Trump,” Matthew Tuttle, chief executive of Tuttle Capital told The Post. “His supporters are rabid.”