Donald Trump’s nascent media and technology company may need to start looking for other financing options, as federal investigations into its merger partner threaten to delay or kill the deal.
On Monday morning, Digital World Acquisition Corp., the special purpose acquisition company (SPAC) that had agreed to merge with Trump Media & Technology Group, disclosed that on June 16 and June 24 it had received grand jury subpoenas.
The subpoenas “and the underlying investigations by the Department of Justice and the SEC, can be expected to delay effectiveness of the Registration Statement, which could materially delay, materially impede, or prevent the consummation of the Business Combination,” DWAC wrote in the filing.
In other words, with the clock ticking on completing the merger (the deal has a deadline of completion by Sep. 8 2022, though it can be extended to March 8, 2023), the investigations threaten to hamper, and potentially kill, the merger. DWAC is holding more than $1.2 billion that is earmarked for Trump’s media and tech business. If the deal falls apart, Trump’s startup would need to look for alternative sources of financing.
The DOJ and SEC investigations are tied to DWAC’s merger process, due diligence and financial relationships between DWAC board members and certain outside entities, among other matters.
In a statement Monday, Trump’s company said that “we encourage-and will cooperate with-oversight that supports the SEC’s important mission of protecting retail investors.”
Trump Media & Technology Group currently has one product in the market: Truth Social, a Twitter-like app that it markets has being a “free expression” alternative to Twitter. Trump himself uses the app exclusively, as contractually mandated, and remains the major draw. The company has not released any usage figures.
The company is also in the process of building out a streaming service that will include “cancelled” shows, podcasts, news and “shows that embrace the Second Amendment.”