Trump's media deal partner nears $50 million financing -sources
08/02/2024 21:17
(Adds share reaction, background)
By Anirban Sen
Feb 8 (Reuters) - Digital World Acquisition Corp
DWAC.O , the blank-check acquisition company that has agreed to
take former U.S. President Donald Trump's social media platform
public, is nearing a $50 million financing deal, people familiar
with the matter said on Thursday.
The deal, which could be announced in the next few days, is
based on convertible notes and will help fund DWAC while it
tries to complete its merger with Trump Media & Technology Group
(TMTG), owner of social media platform Truth Social, the sources
said.
DWAC shares ended trading on Thursday up 4.4% at $47.66 on
the news. They are up almost threefold since Jan. 15 -- when
Trump won the Iowa caucus on his way to the Republican
nomination for president -- as investors bet that his
re-emergence as a major political figure will make Truth Social
more valuable.
Investment firms Anson Funds, All Blue Capital and Mangrove
Partners have offered to buy the convertible notes on offer, the
sources added, cautioning that the timing and composition of the
deal may still change.
The sources requested anonymity because details of the deal
discussions are confidential. DWAC Chief Executive Eric Swider
declined to comment. Representatives for Anson Funds, All Blue
Capital and Mangrove Partners did not immediately respond to
requests for comment.
DWAC had disclosed last month it was raising $50 million in
convertible notes after cancelling a $1 billion
private-investment-in-public-equity (PIPE) transaction.
DWAC agreed to merge with TMTG in October 2021 but failed to
complete the deal by a September 2022 deadline, as U.S.
financial regulators scrutinized DWAC's disclosures to
investors. That gave the PIPE investors the right to cancel
their commitments.
An amendment of TMTG's deal with DWAC last August called for
unwinding the PIPE and gave Trump new shares in DWAC with more
voting power. DWAC has been left with close to $300 million in
funds it raised with its initial public offering in 2021, but
that money is earmarked to go to TMTG once their merger gets
completed.
DWAC has faced several challenges in its bid to complete the
deal with TMTG. It has been the target of investigations by the
U.S. Department of Justice and the Securities and Exchange
Commission (SEC), replaced its chief executive and shook up its
board.
In September, DWAC investors voted to give an extension of
up to one year to complete the TMTG deal. DWAC is now waiting
for clearance from the SEC to allow its shareholders to vote on
the merger with TMTG.
DWAC has said it expects to draw $10 million from the $50
million convertible note raise for its immediate use and tap the
remainder on completing its deal with DWAC.
(Reporting by Anirban Sen in New York
Additional reporting by Svea Herbst-Bayliss in Rhode Island
Editing by Mark Porter and Josie Kao)
((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))