(Reuters) – Some investors are backing away from Digital World Acquisition Corp’s plan to buy former U.S. President Donald Trump’s social media firm Truth Social, the blank check firm said on Friday.
Digital World said it had received termination notices from private investment in public equity (PIPE) investors exiting nearly $139 million in investments out of the $1 billion commitment it had previously announced.
Investors, who signed the PIPE commitment about a year ago, are free to move their money after the September 20, 2022 deadline if the deal is not completed.
Digital World did not disclose the investors who pulled out. Sources told Reuters that Sabby Management, which had committed $1[ads1]00 million to PIPE, is one of the investors that has pulled out.
Sabby Management declined to comment.
More investors could pull out in the coming weeks, sources said, as they could exit at any time after the deadline. Many are waiting for DWAC to propose more preferential terms to PIPE investors, sources added. The deal between the special purpose acquisition company (SPAC) and the Trump Media and Technology Group (TMTG), which owns Truth Social, has been on hold due to civil and criminal investigations into the circumstances surrounding the deal.
TMTG did not immediately respond to a request for comment.
The SPAC had hoped that the US Securities and Exchange Commission, which is reviewing Digital World’s disclosures about the deal, would now have given its blessing. Digital World said this month it would extend the life of the deal by three months after a bid for a 12-month extension from shareholders fell short.
(Reporting by Akash Sriram and Nivedita Balu in Bengaluru, Svea Herbst-Bayliss and Krystal Hu in New York; Editing by Maju Samuel and Josie Kao)