Donald Trump’s Twitter Competitor, Truth Social, Hits A Bump In The Financing Road

There seems to be nothing but bad news for former President Donald Trump lately, with the latest coming 9/5 that 65% of shareholders in the Special Purpose Acquisition Company (SPAC) called Digital World Acquisition Corp. (DWAC.O) have not voted in favor of a proposal to give Trump Media & Technology Group (TMTG) more time to complete the merger.

The deadline for securing those votes was 9/6, although DWAC.O filed paperwork with the SEC on 9/6 stating that it had postponed its special meeting which was scheduled today to September 8 at 12:00 EST in order for shareholders to consider amending their certificate of incorporation to extend the merger closing date up to four times, each time for three months. This could push the closing date as far back as September 8 of 2023.

SPACs have fallen out of favor recently and with all of the legal woes Trump is suffering from, investors in DWAC.O may have turned skeptical of TMTG, the owner of Twitter competitor Truth Social, which has not taken off as quickly as expected.

TMTG may not receive the $1.3 billion in cash it thought it would receive after the merger and will likely have to look for new investors. The cash would have come as a combination of nearly $300 million on the books at DWAC.O and a $1 billion equity commitment from investors which expires on Sept. 20.

The merger has been delayed due to a U.S. Securities and Exchange Commission (SEC) review of the disclosures that investors had been given about the deal, an investigation by the Financial Industry Regulatory Authority, as well as by federal prosecutors.

Truth Social launched with a number of technical glitches and complaints from many that Trump himself wasn’t using the platform (he didn’t post until two months after it launched). The number of followers Trump has on Truth Social is less than 5% of the 89 million Twitter followers he once had.

The company received more bad news on August 19 when Google notified Truth Social “…of several violation of standard policies in their app submission and reiterated that having effective system for moderating user-generated content of our terms of service for any app to go live on GoogleGOOG
Play.”

That’s bad news for Devin Nunes who gave up a seat in Congress that he held for nearly 20 years to become CEO of Truth Social. As a result of the Google decision, the Truth Social app. Is not available to 44% of smartphone users.

Other issues include Axios reporting that it has a past due bill of $1.4 million to its cloud hosting company Right Forge. Therefore, it would appear that TMTG will need a cash infusion sooner, rather than later.

However, the company may be in a bit of a pickle as far as financing goes. It has raised at least $38 million thus far and the agreement with DWAC.O caps the debt TMTG can have on its books prior to the deal closing at $50 million.