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Donald Trump’s Truth Social dealt major blow

A proposed merger with the company that owns Donald Trump‘s social media app, Truth Social has hit a major snag as the founding partner announced it would be returning hundreds of millions of dollars back to investors.

Digital World Acquisition Corp (DWAC), a special-purpose acquisition company that aims to raise funds to merge with a private company, said it would return $533 million raised for the deal with Trump Media & Technology Group (TMTG) having already received termination notices on $467 million work of commitments.

The announcement is the latest for the planned merger which would allow TMTG to go public. TMTG announced it would be merging with DWAC in October 2021 but has been frequently delayed.

The private investment in public equity (PIPE) transaction would have seen TMTG injected with $1 billion following its merger with Digital World. The two companies previously missed a September 2022 deadline to complete the merger, which gave investors the right to cancel their commitments.

DWAC CEO Eric Swider said in a statement that the decision is a “positive development” for the potential merger.

“We are very grateful to the PIPE Investors who showed their support to DWAC and TMTG throughout the PIPE process and in the past two years as we continue to work toward consummating the Business Combination,” Swider said.

“We are confident that with these recent cancellations the PIPE Investors have again demonstrated their overall understanding of the closing conditions in the Merger Agreement, the regulatory landscape, and most importantly, demonstrated their support in seeing this merger through.”

Swider added: “Despite how others may seek to characterize the PIPE commitment cancellations, we want our shareholders to understand that these cancellations are a positive development in our ability to consummate the Business Combination and we ask for the support of the remaining PIPE investors by agreeing to terminate the remaining PIPE investments.”

Devin Nunes, the CEO of TMTG, said that the announcement is an “important step” towards eliminating the PIPE, which TMTG believes would be “in the best interest of TMTG’s equity holders and completing our merger with DWAC as soon as possible.”

It is unclear if the operator of Truth Social will attempt to raise additional funds to support the merger.

Newsweek reached out to Trump Media & Technology Group via email for comment.

The planned merger has been frequently delayed, with Digital World investors voting in September to give an extension of up to one year to complete the TMTG deal.

The deal has also faced a number of other setbacks, including a Securities and Exchange Commission investigation that found that DWAC had misled investors and the SEC by failing to disclose that it was planning on buying TMTG before it raised its $300 million in IPO funds. DWAC was fined $18 million as a result of the investigation.

DWAC also removed its former CEO, Patrick Orlando as the head of the company in March, with another former board member, Bruce Garelick, arrested in June on suspicion of insider trading.

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