Trump’s $4 Billion SPAC Deal Hit by Wave of Lawsuits Over Shares

[Social Media]

 

Former President Donald Trump's potential $4 billion windfall from a blank-check merger involving the company behind his social media platform faces significant hurdles due to a series of legal disputes with his co-founders. Three lawsuits filed this week regarding the deal's share allocation pose a threat to the already delayed plan of having Digital World Acquisition Corp. acquire Trump Media & Technology Group, the entity behind Trump's Truth Social platform. The proposed special purpose acquisition company (SPAC) deal is scheduled for a shareholder vote on March 22.

 

The lawsuits, filed over the share allocation, could potentially delay or derail the merger, with at least one suit seeking to block the deal until the issues are resolved. This legal back-and-forth could extend for weeks or even months, further complicating the already protracted process.

 

The surge in Digital World's stock price this year has made Trump's stake in the company worth billions, providing a possible financial lifeline for the former president amidst looming legal liabilities. Trump faces significant penalties from two legal cases, including a $454 million asset-fraud verdict in New York and an $83 million defamation award demanded by writer E. Jean Carroll.

 

One of the lawsuits, involving Trump Media co-founders Andy Litinsky and Wes Moss, both former contestants on The Apprentice, alleges that Trump's mounting legal obligations make the merger a critical liquidity event for him. They suggest that Trump's actions may be driven by a desire for a last-minute stock grab at their expense.

 

The legal disputes primarily revolve around the conversion ratio of shares held by ARC Global Investments LLC, Digital World's sponsor. While Digital World seeks a conversion ratio of 1.34 to one, ARC contends for a ratio of 1.78. A higher conversion ratio would dilute Trump's stake, albeit not significantly.

 

Litinsky and Moss claim that Trump's authorization to issue up to a billion additional shares in Trump Media serves no legitimate business purpose other than to dilute their stake and allow Trump to claim the majority of the merger consideration for himself.

 

The legal battle further intensifies with allegations against ARC managing member Patrick Orlando, who Digital World accuses of incompetence and refusal to act in the company's best interests, leading to previous delays in the merger process.

 

Overall, the lawsuits cast a shadow over Trump's anticipated windfall from the SPAC deal, highlighting the complexities and challenges involved in finalizing the merger amidst legal disputes and shareholder concerns.

 

03.03.24

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[flyingtlger]

Everything tRump touches or endorses goes to doo doo.....

[Danderman123]

I have a personal interest in this story, because I am a founder of a company going through a SPAC. So, I am sitting in Trump's position, although at a slightly lower scale.

 

I don't know if the SPAC deal will go through, I don't know how valuations are generated, it's a big mystery to me.

 

And then there are the dreaded lockout provisions. Allegedly, Trump has tried to eliminate his lockout, so he can sell stock quickly. But if he sells too much, the share price would collapse.