Digital World Acquisition (US:DWAC), the special purpose acquisition company, or SPAC, planning to take the parent of Donald Trump’s social media venture Truth Social public, failed to get shareholder approval to extend an agreed deadline by another year, imperiling the $1.3 billion cash the former president’s site is set to receive at closing.
Instead, the company agreed to pay shareholders $3 million to extend the deadline by just ninety days.
Earlier this week, the company adjourned its annual meeting and offered $3 million for a three month extension. It also has the option to pay another $3 million in December to extend the deadline another three months.
Digital World filings with the US Securities & Exchange Commission revealed that the Shanghai-based firm sponsoring the SPAC was prepared to pay $2.8 million to get the company the extension.
But half a loaf is better than nothing, and the extension allowed the company to avoid a liquidation planned for Thursday absent an agreement.
“The SEC has needlessly delayed its review of our proposed merger, causing real and unnecessary financial harm to DWAC investors,” Trump Media & Technology Group said in a Thursday statement. “The SEC needs to set aside any improper political considerations and bring its review to a swift conclusion.”
It’s not certain that the review can be completed within six months.
The SEC is scrutinizing the deal’s terms and conditions, and there is also a criminal investigation of the proposed transaction.’
The SPAC failed to reach the 65% shareholder approval needed to extend the deadline.
The Wall Street Journal reported that the company had trouble corralling individual investors’ votes and summed up analysts’ reactions by saying the vote is a remarkable example of investors failing to do something simple that is in their control and costing themselves money.
The paper noted that many individual investors are unfamiliar with shareholder votes. A large number of those investors, drawn by the lure of the ex-president’s name, didn’t understand the vote, analysts told the paper, calling it a risk related to novice investor speculation.
This article originally appeared on Fintel
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