Some investors back out of SPAC merger with Trump’s media company

The Truth social network logo is seen on a smartphone in front of a screen of former U.S. President Donald Trump in this illustration taken February 21, 2022. REUTERS/Dado Ruvic/Illustration/File Photo

Sept 23 (Reuters) – Some investors are scrapping Digital World Acquisition Corp’s (DWAC.O) plan to acquire Truth Social, the social media company of former U.S. President Donald Trump, the blank check firm said on Friday .

Digital World said it received termination notices from private equity investment (PIPE) investors, terminating nearly $139 million in investments of the $1 billion commitment it had previously announced.

Investors, who signed the PIPE pledge about a year ago, are free to transfer their money after the September 20, 2022 deadline if the deal does not close.

Digital World did not reveal which investors pulled out. Sources told Reuters that Sabby Management, which had committed $100 million to the PIPE, is one of the investors who have exited.

Sabby Management declined to comment.

Other investors could pull out in the coming weeks, sources said, as they can end anytime after the deadline. Many are waiting for DWAC to offer better terms to PIPE investors, the sources added.

The deal between the Special Purpose Acquisition Company (SPAC) and Trump Media and Technology Group (TMTG), owner of Truth Social, has been frozen due to civil and criminal investigations into the circumstances surrounding the deal.

TMTG did not immediately respond to a request for comment.

SPAC had hoped that the United States Securities and Exchange Commission, which reviews Digital World’s disclosures about the deal, would now have given its blessing.

Digital World announced this month that it would extend the term of the deal by three months after its bid for a 12-month extension from its shareholders fell through.

Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Svea Herbst-Bayliss and Krystal Hu in New York; Editing by Maju Samuel and Josie Kao

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