Former President Donald Trump is set to receive a multi-billion dollar windfall after shareholders of Digital World Acquisition Corp. voted to merge with his Trump Media & Technology Group. However, this expected $2.9 billion will not assist him in paying fines owed to New York state totaling over $455 million in fines and interest for fraudulently misstating asset values for personal gain. Despite claims of having close to $500 million in cash and liquid assets, Trump’s financial situation remains dire as he faces difficulties securing a bond to cover the fines while he appeals the decision.
With the merger approval, Trump will hold around 79 million shares in the company, valued at approximately $2.9 billion based on Digital World’s closing price of $36.94. Although this significant amount of wealth could potentially help Trump with his financial obligations, his inability to access these shares or use them as collateral due to restrictions outlined in the merger agreement presents a major roadblock. This prohibition on selling shares for six months after the deal and the inability to pledge locked-up shares for obtaining a loan or bond further complicates Trump’s financial situation.
Experts in initial public offerings (IPOs) confirm that Trump will face challenges in leveraging his stock holdings to address his financial woes. The merger agreement explicitly prohibits the use of locked-up shares as collateral or for any form of liquidity, presenting a difficult situation for Trump as he seeks options to meet his obligations. Altering the lock-up provisions may be possible, but it would involve significant risks and potentially lead to litigation, as board members would need to secure shareholder approval, which could be challenging given Trump’s conflict of interest in the matter.
Board members of the merged company, including Trump loyalists such as former administration officials and Donald Trump Jr., will play a vital role in deciding whether to allow Trump to access his locked-up shares. However, lifting restrictions on stock sales could have negative implications for shareholders, potentially leading to instability in the stock price due to increased volatility in the market. Institutional investors may hesitate to invest in a stock like DWAC/DJT with such uncertainty surrounding the future of the company, creating challenges for Trump and other shareholders seeking financial solutions.
Overall, while Trump’s impending windfall from the merger with Digital World Acquisition Corp. may seem like a significant financial gain, his inability to utilize these shares to address his outstanding fines reveals a complicated financial situation. The restrictions outlined in the merger agreement and the potential risks associated with altering these provisions present challenges for Trump and the company’s board members. Moving forward, the decision to lift restrictions on Trump’s shares will require careful consideration by all parties involved to navigate potential litigation and maintain stability in the stock price.
