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Investor Demands for Refunds Prompt Trump Media to Return $1 Billion

The funding partner for Trump Media & Technology Group said that it will return the remaining $533 million of the $1 billion raised to finance the venture after investors canceled $467 million of commitments. 

Digital World Acquisition Corp. (DWAC), a so-called special-purpose acquisition company, said in a regulatory filing that it has received termination notices from investors for $467 million of the funding. The remaining $533 million will be returned to investors, with DWAC CEO Eric Swider saying in a press release that the decision is a “positive development” as Trump’s media group focuses on developing a “sustainable business model.”

The loss of funding for DWAC appears to be a step backward for the prospective merger between the company and Trump’s media outfit, which runs Truth Social, a social media service with a conservative flavor. When the merger was first announced in 2021, it sparked an 800% surge in DWAC’s shares, prompting comparisons to meme stocks.

Since then, however, the merger has faced numerous obstacles, including regulatory scrutiny. 

“[D]espite how others may seek to characterize the [private investment in public equity, or PIPE] commitment cancellations, we want our shareholders to understand that these cancellations are a positive development in our ability to consummate the business combination,” Swider said in the statement.

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Plans to complete merger

DWAC had about $1 billion worth of securities purchase agreements with some institutional investors, with the company noting in the regulatory filing that those investors had sent it termination notices for about $467 million. It said it will “unwind the remaining balance” of the investment. 

With the loss of the funding, it’s unclear how Trump’s media group, called Trump Media & Technology Group, would finance its operations after the merger. The plan was that DWAC would provide TMTG with a deep pool of funds after the merger was completed. 

But that merger has been delayed multiple times, most recently with DWAC shareholders in September approving a one-year extension of the merger deadline between the two companies. Without that extension, DWAC would have faced liquidation last month. 

“Today’s announcement is an important step towards eliminating the PIPE — which TMTG believes would be in the best interest of TMTG’s equity holders — and completing our merger with DWAC as soon as possible,” said TMTG CEO Devin Nunes in Thursday’s statement. He did not provide details as to why the elimination of the financing would benefit his company’s shareholders.

However, 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.”

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