Donald Trump’s social media startup has raised $1 billion from unspecified investors as the company pushes its plans to go public through the Spac merger.
Trump Media and Technology Corporation on Saturday said it had raised $1 billion in private investment in public equity funding (Pipe), but did not name any investors.
In October, the former president of the United States announced Launching Truth Social, an existing app-less social media platform that intends to list through the Spac merger in New York. The move comes as Trump remains banned from Twitter, Facebook and YouTube following the January 6 attack on the US Capitol, and as the frenzied Spac market has cooled significantly in recent months.
Trump said: “$1 billion sends an important message to Big Tech that censorship and political discrimination must end.”
“As our balance sheet expands, TMTG will be in a stronger position to counter the tyranny of Big Tech,” he added.
The startup TMTG, chaired by Trump, will merge with drum testing company Digital World Acquisition Corp run by Patrick Orlando. Spac raised $293 million when it listed on the Nasdaq exchange in September, and 11 hedge funds, including Saba Capital and DE Shaw, led by prominent Democratic Party donors, have joined. on the offering, according to legal filings.
The Pipeline financing of this deal far exceeds the proceeds of Spac’s IPO and is in the form of convertible preferred stock. The conversion price is set at a 20% discount from Spac’s five-day average trading price prior to December 1, which puts the conversion price at around $35. Digital World has been trading as high as $94 per share and hedge fund group earn millions when it was first listed on the Nasdaq exchange.
Shares of Digital World jumped above $10 per share at list price in anticipation of the Trump media venture. Typically, Pipe investments are announced in conjunction with the business combination. However, as Digital World waited to raise institutional capital, it was able to capitalize on the hype to sell Pipe’s stock at a much higher price than the traditional $10/share. .
Pipe’s share price could rise or fall depending on how Digital World trades, and the proceeds between Spac and Pipe are expected to provide $1.25 billion to TMTG after expenses. Spac shareholders will have the usual option of getting their money back before the end of the consolidation if they so request.
TMTG’s Truth Social platform currently has no app or business plan but describes itself as allowing chat “without discrimination on the basis of political ideology”.
