Trump's SPAC Partner For Truth Social Deal Faces Setback As Shareholders Reject Time Extension: Report

Digital World Acquisition Corp. DWAC could face the risk of being liquidated, as the special purpose acquisition vehicle (SPAC) which was to merge with Trump Media & Technology — the company behind Donald Trump’s Truth Social platform — failed to get shareholder support for a year’s extension to complete the deal, Reuters reported.

What Happened: The proposal to extend the deal received by Monday far less than the 65% of the shareholders’ votes required for it to become effective, Reuters reported, citing people familiar with the matter.

The final vote tally would be officially announced at a special meeting of Digital World shareholders, scheduled on Tuesday.

See also: Could Donald Trump's SPAC Deal Fall Apart? Here Are The Stakes

Why It’s Important: The consummation of the deal has been delayed for want of clearance from the SEC, which is reportedly reviewing disclosures made by the company over the deal.

Given the voting trend, Digital World is not confident of getting shareholder support for the extension and is considering options, including a potential extension of the voting deadline, Reuters said.

The report also suggested the company may leverage the deadline extension option by up to six months without shareholder approval.

Non-completion of the deal would jeopardize the prospect of TMTG getting a $1.3 billion cash infusion it was supposed to receive from Digital World, according to an agreement made last October.

Truth Social was floated by Trump's team following his ban on social media platforms, including Twitter, Inc. TWTR in the aftermath of the January 6 Capitol Hill riots. It is available for download on Apple Inc's AAPL App Store, although Alphabet, Inc.'s GOOG GOOGL Google Play Store has rejected it.

Price Action: Digital World closed Friday’s session 5.80% higher at $24.99, according to Benzinga Pro data