Politico reports that the troubled alliance between Donald Trump’s social media start-up and the organization behind the SPAC that would make it public is on the verge of dissolving permanently as potential investors either back out of their plans to fund it or demand a higher return on their investment.
The proposed deal, which was supposed to inject over a billion dollars into the struggling startup before it went public but may now fall apart on its own, is at issue.
According to salon Declan Harty, if investors are expected to park their money in a business deal that has been struggling since its inception, they now want a bigger part of the action.
Reporting, “The group of more than three dozen investors who had planned to put $1 billion into the company have begun to waver as bad news keeps piling up around the deal,” Harty wrote, “The hedge funds, trading firms and other major backers are questioning whether the financial riches that first attracted them to the transaction are still strong enough to hold their interest in a deal fraught with troubles, according to four investors who asked not to be named.
Negotiations have been ongoing as some investors seek bigger potential profits in exchange for following through on commitments to put hundreds of millions of dollars into the venture.” Investment analysts are raising the alarm because the company has a cloud over it due to an SEC investigation and its inability to pay its bills.
According to Kristi Marvin, of data research company SPACInsider, “This deal has taken more left turns than a doorknob. Now, it’s just got so much hair on it.”
Writing, “Eleven months ago, Trump Media & Technology Group unveiled plans to merge with a company called Digital World Acquisition Corp. in a SPAC deal,” Harty added, “At stake for Trump and his startup — the company behind conservative social media app Truth Social — is hundreds of millions of dollars, marking the latest blow to the former president’s business empire since he left office.”
The Politico report adds that one potential investor told them on the condition of anonymity, “that they do not expect to get back into the deal, adding that they had remorse about doing it, to begin with considering the former president’s involvement. The investor said that much of the interest in the deal has revolved around the economics of it, with many set to profit from huge windfalls should it go through.”