Trump-Linked SPAC Digital World (DWAC) Formally Loses Every Cent of Its Original $1 Billion in Pipe Investments
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Digital World (NASDAQ: DWAC), the Special Purpose Acquisition Company (SPAC) that is slated to take the parent of the Truth Social app - Trump Media and Technology Group (TMTG) - public in a reverse merger deal, continues to pay the price for not adhering to its contract timelines, bogged down as it is by a number of federal investigations.
Digital World raised supplemental PIPE investments worth $1 billion back in 2022. These investments were supposed to bolster Truth Social's finances after the consummation of the merger agreement between Trump Media and Technology Group and Digital World. That consummation, however, has yet to materialize, given the complications introduced by a slew of federal investigations against DWAC.
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While PIPE investments worth $467 million had already fled, Digital World intimated in October 2023 that the remaining investments worth around $533 million were also at risk.
Today, as per a pertinent filing with the SEC, Digital World has announced that its Securities Purchase Agreements (SPAs) with the remaining PIPE investors have been "terminated" following the refusal of these investors to entertain any extension or waiver vis-a-vis the contractually mandated closing date:
The SPAC continues to retain access to around $293 million in proceeds that it raised as part of its IPO.
Digital World faces a number of federal investigations related to inappropriate disclosures of the events leading up to the finalization of its merger agreement with Trump Media and Technology Group. It was only recently that Digital World reached a settlement with the SEC for misleading investors by failing to disclose a number of merger-related preliminary discussions with TMTG as well as other investors in the spring
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