Donald Trump’s legal dispute with his former business partner will soon come to an end. A vote is set to decide whether the former US President can reap a $3.5bn windfall if he takes the company that runs his Truth Social network to the public.
On Friday, a shareholder vote is scheduled to approve a deal involving a Special Purpose Acquisition Company named Digital World Acquisition Corporation with Trump Media & Technology Group. Patrick Orlando has not yet cast his vote, even though Arc Global Investments, the largest shareholder in DWAC is owned by him.
Orlando was the former CEO of the Blank-Cheque Company and is a member of its board. He has, however, threatened to withdraw his support.
In a lawsuit filed on Tuesday by DWAC, attorneys acting for the Spac claim that Orlando must approve the deal. They accuse him of holding his vote “hostage” to achieve personal financial gain.
Orlando, who sued in February to block the deal, unless he received a higher distribution from the transaction, did not respond to an inquiry for comment.
Trump faces mounting legal costs. Former president Trump has stated that he might need to sell off prized properties at a fire auction to raise $500mn in order to stop the enforcement of an anti-fraud judgment in New York.
Spacs will raise capital through a stock market listing, and then acquire a business that is likely to go public. The 145 percent increase in DWAC shares since the beginning of the year has boosted TMTG’s implied fully diluted value to $9 billion.
Although Trump is bound by a lock-up contract that prevents Orlando Orlando from selling their shares for six month, the stake of over 40 percent could be a lifeline to financial stability if this deal proceeds.
Orlando’s influence is due to the free shares that he received for establishing Spac. The Florida businessman holds 14,8% of DWAC shares. DWAC, which is dominated by retail investors, would need to get almost 60% of its stockholders to back the deal if he doesn’t.
DWAC has on numerous occasions struggled to rally its shareholders in voting for resolutions that it proposed. It recently warned it may face difficulties reaching the voting threshold required to approve the TMTG transaction.
In a document filed last month, DWAC stated that “the professional relationship between Mr Orlando’s company and Digital World has become strained. It continues to deteriorate so that it is not possible to guarantee that Mr Orlando will cooperate as a member of our board of directors or as a controlling associate of the sponsor.”
“In this case, we may have difficulty obtaining the required vote of approval.” . . “We could be liquidated if we don’t respond in a timely manner or even at all,” the company said.
Orlando, a Miami businessman who was little known before his dealings Trump, managed DWAC in a turbulent period. The company faced a number regulatory investigations, which caused the TMTG acquisition to be delayed from its original announcement in late 2021.
DWAC fired Orlando from his position as CEO in March 2023, and replaced him with Eric Swider. Eric Swider is a Puerto Rican businessman. The company settled a Securities and Exchange Commission probe over the disclosures around its initial public offering in 2021 by paying $18mn.
Three hedge funds stand to gain a lot from this deal. Anson Funds Mangrove Capital Partners, and All Blue Capital who agreed to take part in a $50mn debt offering in this year, after other funds walked out, have more than $400mn of gains, based on DWAC closing at $42.81 per share on Thursday.