Funding Partner for Trump Media & Technology Group to Return $533 Million Amid Investment Cancellations

The funding partner for Trump Media & Technology Group, Digital World Acquisition Corp. (DWAC), has announced its decision to return the remaining $533 million of the $1 billion raised for the venture. This decision comes after investors canceled $467 million in commitments. DWAC, known as a special-purpose acquisition company (SPAC), detailed the termination notices it received from investors in a regulatory filing.

Eric Swider, CEO of DWAC, expressed in a press release that the decision to return the $533 million is seen as a “positive development.” This move aligns with the Trump Media & Technology Group’s focus on developing a “sustainable business model.” The loss of funding signifies a setback for the proposed merger between DWAC and Trump’s media entity, which operates Truth Social, a conservative-leaning social media platform.

The initial announcement of the merger in 2021 led to an 800% surge in DWAC’s shares, drawing comparisons to meme stocks. However, the stock, which reached a high of over $100 in 2022, was valued at $15.40 prior to the start of trading on Friday. The merger faced several challenges, including regulatory scrutiny, following its initial enthusiasm.

Despite the cancellation of private investment in public equity (PIPE) commitments by investors, Swider emphasized that this development is a positive step in enabling the business combination. DWAC had approximately $1 billion worth of securities purchase agreements with institutional investors, with the termination notices amounting to around $467 million. The company intends to “unwind the remaining balance” of the investment.

The loss of this funding leaves questions about how Trump’s media group, the Trump Media & Technology Group, will finance its operations post-merger. The original plan was for DWAC to provide a substantial pool of funds after the completion of the merger. The merger, however, faced multiple delays, with DWAC shareholders granting a one-year extension of the merger deadline in September. Without this extension, DWAC would have faced liquidation in the prior month.

Trump Media & Technology Group CEO Devin Nunes stated that the announcement is a significant step toward eliminating the PIPE, without providing detailed reasons for the benefit to the company’s shareholders. Swider noted in the statement that Trump’s media group has a “reduced need for capital” and a “commitment to growing a sustainable business model.”

As the saga between DWAC and Trump’s media entity continues, it remains to be seen how this funding issue will ultimately impact the merger and the financial future of the Trump Media & Technology Group. The business and financial communities will be closely watching as the situation unfolds.