The Billions for Trump’s Media Deal Lie Under a Very Heavy Cloud

It seems that the Department of Justice and the SEC are looking at very similar issues.

The SEC became interested in DWAC after the New York Times reported last year that the vehicle’s promoters met with Trump in March of last year, about six months before announcing the deal to acquire Trump’s Truth Social. DWAC was listed in September and announced the deal in October.

SPACs are not allowed to have specific acquisitions in mind when raising funds, a regulation designed to prevent the vehicles from being used to circumvent the heavy disclosure requirements and investor protections offered by conventional IPOs.

DWAC has previously said none of its executives had been involved in “substantive” discussions with Trump or Truth Media officials.

DWAC has raised $293 million at $10 a share for its listing and has pledges of an additional $1 billion at $10 a share or a 40 percent discount off the market price if the deal with Trump closes.

The institutional investors in that second tranche of funds, and Trump, would kill for the current prices of DWAC stock and warrants (albeit much less than when the vehicle was valued at more than $5 billion last year) if the fusion of DWAC and TMTG is complete.

The news sent the already plummeting DWAC stock price even lower.Credit:AP

Trump himself would end up with between 47 and 58 percent of a vehicle worth well over $1 billion, even at the lower prices, and a vehicle with $1.3 billion in cash if institutional investors’ commitments are met.

The deal is expected to close by September 8, although a six-month extension is foreseen if investors agree.

Given the volatility in the market, the poor performance of SPACs in general and the threat posed by the duplication of investigations, it would be courageous investors who have committed to an additional six months of exposure to the market and legal risks.

Without the DWAC funds, the future of TMTG is clouded. It raised $15 million to build its Truth Social rip-off of Twitter after Twitter banned Trump from service after the January 6 invasion of the Capitol, cutting him off from his 89 million followers.

TMTG without Trump is worthless and its value if the core of Trump’s appeal is given away elsewhere is almost worthless.

Truth Social launched in February but was plagued by technology-related issues, with some users having to be put on a waiting list to access the platform that lasted two months. It still doesn’t have an Android app, which means it doesn’t have access to 40 percent of the US market.

It has about 2.6 million lifetime downloads from the US Apple Store, and Trump himself is followed by about 3.3 million users — less than four percent of the audience he ever had on Twitter. Twitter has nearly 230 million active users.

It probably hasn’t helped a platform created in response to Twitter’s ban on Trump and some other conservatives — a platform that says it exists to provide users with a true platform for free speech and cancellation by “Big Tech” – that Truth Social itself has banned users (other than Trump) from making references to the January 6 committee hearings

If DWAC fails to complete the deal with Trump as a result of the actions of federal prosecutors and the SEC, TMTG will be forced to look for new investors if it is to have any hope of the fate of a long list. of other failed Trump ventures.

Nor would it have comforted potential investors to learn that DWAC’s contract with Trump allows him to post political statements (which attracted his Twitter user base) to other platforms, especially since Elon Musk has vowed to allow Trump and other banned users. stand back on Twitter if his bid on that platform is successful.

TMTG without Trump is worthless and its value if the core of Trump’s appeal is given away elsewhere is almost worthless.

While Trump may be motivated by future wealth if Truth Social succeeds, his political future and his social media value lies in his political stature, which dictates (with his own ego) that he must reach the widest audience. That’s on Twitter, not Truth Social.

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If DWAC fails to complete the deal with Trump as a result of the actions of federal prosecutors and the SEC, TMTG will be forced to look for new investors if it is to have any hope of the fate of a long list. of other failed Trump ventures.

In the current market environment, the increased distaste for SPACs, the continued focus of the Jan. 6 commission on Trump’s role and actions in the run-up to the Capitol invasion, the prospect of competing with Twitter for Trump’s and the uncertainty of whether Trump will be the Republican candidate in the next presidential election (and therefore remain equally relevant) were all trying to diminish TMTG’s appeal and value even before the latest threat to the deal arose.

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