Donald Trump's new social media firm stated on Saturday that it had achieved an agreement to raise around $1 billion from undisclosed investors in order to float on the New York Stock Exchange.
The capital raising, which Reuters first revealed on Wednesday, demonstrated the ex-president's capacity to draw large sums of money due to his personal and political name. He's working on a social networking app called TRUTH Social, which should be available in a few weeks.
Digital World, the blank-check acquisition corporation that would take Trump's company public by listing it in New York, announced that it would contribute up to $293 million to Trump's media venture, bringing the overall earnings to around $1.25 billion.
Trump Media and Digital World told the media that the $1 billion will be raised through direct investment transactions from "various institutional investors." Requests for the names of the investors were ignored.
In October, Trump Media signed a contract with Digital World to go public for $875 million, including debts. Based on the price of Digital World shares at the close of trade on Friday, the social media company is now worth about $4 billion. The share price was scooped up by Trump followers and investors.
Many Wall Street organizations, such as mutual funds and private equity firms, passed on the PIPE chance. Hedge funds, family offices, and high-net-worth individuals were among the investors involved. Family offices run the fortunes of the very wealthy and their relatives.
Some Wall Street investors are skeptical about Trump's presidency. After his followers attacked the US Capitol on Jan. 6, he was blocked from major social media websites for fear of inciting future violence. The attack on the Capitol was predicated on unfounded allegations of extensive electoral fraud in the previous year's presidential election.
Trump stated on Saturday that Trump Media Technology Group's balance sheet is growing, putting the company in a better condition to battle Big Tech's despotism.
The agreement is also subject to regulatory review. Last month, Senator Elizabeth Warren requested Securities and Exchange Commission Chairman Gary Gensler to look into the future merger for possible securities law breaches related to disclosure. The SEC has refused to say if it intends to take any action.
According to Trump Media and Digital World, the per-share conversion price of the convertible preferred stock PIPE deal is a 20% discount to Digital World's volume-weighted average closing price for the five trading days leading up to Dec. 1, when Reuters broke the news of the capital increase.
If that price falls below $56 in the ten days following the merger with Digital World, the discount will increase to 40% with a $10 floor, according to the firms. On Friday, Digital World's stock closed at $44.97.
According to his company's website, Trump had 89 million followers on Twitter, 33 million on Facebook, and 24.5 million on Instagram at the time he was banned.
As Reuters reports, investors who attended the private investor tours were shown a demo of the anticipated social media app, which imitated a Twitter feed.
Trump has hinted that he will run in the elections in 2024.
Before the Trump media agreement, special-purpose companies like Digital World had lost a lot of their attractiveness among ordinary investors. After the firms combined with SPACs failed to deliver on their high financial expectations, many of these shareholders were left with significant losses.
TRUTH Social is expected to be fully launched in the first quarter of 2022. According to news articles, this is only the initial phase of the Trump Media project, followed by the launch of a video-on-demand service called TMTG+, in which subscribers will be able to watch a variety of entertainment content, news, and podcasts.
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