Update 9:43am: Updates shares.
Trump SPAC Digital World Acquisition ( NASDAQ: DWAC ) plunged 16% after a report that it failed to win approval for an extension to complete its deal with Trump's social media company and app Truth Social.
Digital World ( DWAC ) executives don't believe they have secured enough votes to secure a one year extension to complete the deal, according to a Reuters report, which cited people familiar. DWAC needs 65% of holders to vote in favor of an extension.
The outcome of the vote is scheduled to be announced later Tuesday at a meeting of DWAC holders. Most of Digital World ( DWAC ) holders are individual investors and pushing them to vote through their brokers has been a struggle, DWAC CEO Patrick Orlando said last week, according to Reuters.
DWAC shareholders are scheduled to vote on whether they want to extend the SPAC's ability to do a transaction by another year to later Tuesday. DWAC has warned previously that if the deal isn't extended, the SPAC may be forced to liquidate.
One option being considered by DWAC is to postpone the vote deadline as it tries to garner support to an extension, according to Reuters. If DWAC does indeed fail to get the extension from shareholders, it has the right for a six month extension without holder approval. It's not clear at this point if DWAC will pursue this option.
Another issue for Digital World ( DWAC ) is that a $1 billion PIPE commitment group of investors is set to expire on Sept. 20 unless the transaction with Trump Media & Technology Group is completed. Investment banks for DWAC have been contacting PIPE investors in the last few weeks to see if they would consider extending the PIPE, Reuters added.
Last month DWAC filed to delay the release of its Q2 results . Shares of DWAC have plunged 51% this year as the company has been beset by regulatory probes and potential competition with a Twitter ( TWTR ) controlled by billionaire Elon Musk, who has said he would allow Trump back on the platform that he was banned from last year.
Digital World Acquisition ( DWAC ) saw a massive rally in wake of news that it will take Trump's new media company public via a SPAC merger. The stock gained more than 350% when the news was announced Oct. 21. DWAC shares have dropped 74% from their highs in early March.
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Trump SPAC Digital World tumbles 16% on report of failed extension for deal (update)