Digital World (DWAC) Adjourns Extension Vote to November 3
by Nicholas Alan Clayton on 2022-10-10 at 1:32pm

Digital World (NASDAQ:DWAC) has once again pushed its special meeting to vote on a one-year transaction deadline extension to Thursday, November 3.

This three-and-a-half week postponement is an unusually long one, but is unsurprising in for what has become one of the most unusual deal processes in years. For one, this is the fifth postponement of this very meeting, as Digital World adjourned it without conducting any business four earlier times in September.

Digital World’s sponsor has already deposited $0.10 per share to extend its deadline to December 8, and the SPAC is trading well above pro rata trust value, last closing at $17.32. So, the concern at this stage is not about a possible liquidation or attempts to keep in redeemers.

Instead, Digital World and its proposed combination with Trump Media and Technology Group (TMTG) are facing a long SEC review process as well as changes to its $1 billion PIPE. The outside date for the deal’s PIPE passed on September 20, and investors representing $138.5 million of this amount have already hit the exits.

Remaining PIPE investors have reportedly been seeking a lower conversion price for the preferred stock they receive in the mechanism, and negotiations appear to be ongoing. As such, Digital World may have already anticipated postponing this meeting again with the goal of asking for the full-year extension once the new terms of the PIPE have been settled and secured.

As if that were not enough plates to have spinning, billionaire Elon Musk has brought a new layer of uncertainty by reviving his bid to buy out Twitter (NYSE:TWTR). Aside from being TMTG’s most direct competitor, a major part of TMTG’s raison d’etre was the banning of former President and TMTG Chairman Donald Trump from connecting to his huge following on the platform.

Musk has been vocal in supporting various figures that have been banned from social media platforms, and it is widely speculated that a Musk-owned Twitter would allow Trump back on. And while Trump has already stated he would not go back to Twitter, Trump has been known to change his mind. If such were to pass, TMTG would no longer have an exclusive hold on its biggest draw.

There is plenty of uncertainty around what will happen with Musk’s Twitter bid, which has court dates and debt investor meetings of its own set to play out in the coming weeks. Digital World is likely hoping things will be clearer with both Twitter and the PIPE by November 3.

Then again, the SEC has yet to announce its final proposed rule changes for SPACs and the US has midterm elections set for November 8, with control of Congress potentially in the balance. This could have its own affects on TMTG. As such, a sixth postponement of this meeting would likely not shock SPACland.

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