By Svea Herbst-Bayliss and Helen Coster
NEW YORK (Reuters) -Investors in Digital World Acquisition (DWAC), the blank-check acquisition company that plans to merge with former U.S. President Donald Trump's social media firm, voted on Tuesday to give up to a one-year extension to complete the deal.
After a number of delays, enough shareholders agreed to give DWAC up to an additional 12 months to finalize its plans with Trump Media & Technology Group (TMTG), a person familiar with the vote said on Tuesday.
Digital World needed to get 65% of its roughly 400,000 shareholders to vote to approve the extension.
DWAC and TMTG were not immediately available for comment.
If Digital World had not received shareholder approval of an extension by Sept. 8, its corporate charter would have required the firm to liquidate and return to current shareholders the $300 million raised in its 2021 initial public offering.
Shares of Digital World were trading at $16.80 on Tuesday, up 1.8% on the day but down from a peak of around $97 a share in March, 2022.
Digital World has faced a series of challenges since the October 2021 announcement that it was planning to acquire TMTG. It has been the target of investigations by the U.S. Department of Justice and the Securities and Exchange Commission (SEC).
If DWAC's deal with TMTG closes, Trump Media would gain access to more than $1 billion in cash from DWAC's institutional investors, such as hedge funds. According to a Feb. 2, 2021 services agreement, Trump controls 90% of Trump Media.
It's unclear how TMTG will fund itself if the DWAC deal does not close. TMTG previously raised $22.8 million in financing from private investors, Reuters reported last October. That funding was in the form of promissory notes dating from between May 2021 and the middle of 2022 – a form of short-term debt that can be converted to shares of the company when TMTG goes public.
(Reporting by Svea Herbst-Bayliss; Editing by Emelia Sithole-Matarise and Paul Simao)