Truth Social deal partner set to receive $50 mn ahead of public debut: Report

Digital World Acquisition Corp (DWAC), the blank-check acquisition company set to take former US President Donald Trump's social media platform public, is reportedly on the brink of securing a $50 million financing deal.

A Reuters report cited sources familiar with the matter, who said that the deal, based on convertible notes, is expected to be announced in the coming days.

The financing will play a crucial role in supporting DWAC as it navigates the final stages of its merger with Trump Media & Technology Group (TMTG), the owner of the anticipated social media platform Truth Social.

DWAC shares experienced a surge, closing 4.4 per cent higher at $47.66 following news of the impending financing deal.

The stock has witnessed a remarkable threefold increase since January 15, coinciding with Trump's victory in the Iowa caucus, as investors anticipate the former president's return to the political arena, potentially enhancing the value of Truth Social.

Investment firms, including Anson Funds, All Blue Capital, and Mangrove Partners, have reportedly expressed interest in purchasing the convertible notes, underscoring the financial community's keen interest in the venture.

The merger journey for DWAC and TMTG has been marked by challenges and regulatory scrutiny.

DWAC initially announced a $1 billion private-investment-in-public-equity (PIPE) transaction, which was later cancelled.

Facing delays and regulatory scrutiny, the company amended its deal with TMTG in August 2021, giving Trump new shares in DWAC with increased voting power.

The company has since faced investigations from the US Department of Justice and the Securities and Exchange Commission (SEC), leading to changes in its leadership and board.

Despite these hurdles, DWAC is poised to draw $10 million from the $50 million convertible note raise for immediate use, with plans to tap the remainder upon completing the merger with TMTG.

The path to completing the merger has been prolonged, with DWAC initially failing to meet the September 2022 deadline.

A crucial amendment to the deal unwound the PIPE and granted Trump additional shares with enhanced voting authority.

The company is currently awaiting SEC clearance to allow shareholders to vote on the merger with TMTG.

DWAC's resilience is evidenced by its commitment to the process, as it expects to utilise $10 million from the convertible note raise immediately, with the remainder kept for the completion of the deal with TMTG.

(With inputs from Reuters)