Investors seem incredibly optimistic about the special purpose acquisition company (SPAC) called Digital World Acquisition Corp. (DWAC.O) and their ability to merge with Trump Media & Technology Group (TMTG), the owner of Truth Social. This is despite the fact that there are three investigations into the company and it has been unable to obtain a quorum of shareholders allowing it to delay closing for up to a year.
The three investigations come from the United States Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority, as well as federal prosecutors. These petitions forced the company to ask shareholders to grant it a one-year extension to complete the transaction. Without it, the company would have been forced to liquidate on 9/8, returning $10.20/share to investors.
When 65% of investors failed to approve the extension by the September 6 deadline, the company attempted to launch a Hail Mary on September 6, asking shareholders to approve up to four three-month extensions in exchange for a small cash payment of $2,875. million per quarter, which equals $0.10 per share.
It worked! Although the company has still not been able to obtain a quorum of shareholders to obtain the four extensions, it changed its incorporation documents allow two three-month extensions. On September 8, Digital World Acquisition Corp. issued a promissory note to ARC Global Investments II LLC, the company’s sponsor in connection with the extension of the termination date of its business combination with TMTG for the initial three-month period (and presumably any further extensions). The note is convertible into new shares at $10/share.
The company also moved its special meeting again, from September 8 to October 10, hoping to achieve a quorum of shareholders to allow for four three-month extensions. Shares of DWAC jumped 2.8% to $24. Although they are trading only a fraction of their 52-week high of $175/share set intraday on October 22, 2021, they are trading at more than double the liquidation value if the merger does not go through. .