Executives behind a blank-cheque company that plans to take Donald Trump’s media business public have failed to pay their proxy solicitors even as they struggle to drum up support for an extension to complete the deal.
Digital World Acquisition Corporation, a special purpose acquisition company set up by Patrick Orlando, has not paid Saratoga Proxy Consulting for its work helping to rally shareholders, according to people familiar with the situation.
DWAC owes the New York-based firm a six-figure sum but Orlando has informed it that there is no money to pay the bill, one of the people said. On Friday, the company announced that it had brought on a new proxy solicitor, Alliance Advisors.
Orlando responded to an email sent by the Financial Times with a screenshot appearing to show a message sent to a DWAC shareholder by TD Ameritrade on September 13 saying voting had closed a week earlier and a link to its latest filing with the Securities and Exchange Commission. Saratoga declined to comment.
DWAC’s failure to pay its proxy solicitors could raise questions about the finances of its backers, including Orlando, who stand to make hundreds of millions of dollars if the deal is completed. If the transaction falls through, investors will receive $10 per share but the sponsors will lose the money they put forward to set up the company.
In May, DWAC warned investors that it faces risks because of Trump’s history of business bankruptcies and said “there can be no assurances that TMTG will not also become bankrupt”.
The blank-cheque group hired Saratoga in August as it sought to secure approval from shareholders for a one-year extension to complete its deal with Trump Media & Technology Group, which it says has been slowed down because of investigations by federal prosecutors.
It agreed to pay the firm a $25,000 fee plus expenses, which typically include enlisting the help of call centres and mailing out voting cards to shareholders.
Despite an aggressive campaign by Orlando to reach DWAC’s base of retail investors, just over 40 per cent have voted in favour of the extension as of this week, according to a source familiar with the count. The company requires 65 per cent of shareholders to approve extending the deadline at its meeting on October 10.
Retail investors are notoriously difficult to reach and companies can often end up spending millions of dollars soliciting their votes. Orlando has stated in several public interviews that DWAC has a much higher percentage of retail shareholders than most Spacs.
The Spac initially had until September 8 to secure shareholder approval for the extension, but its sponsor bought more time by paying $2.9mn for a three-month extension to December 8.
If successful, the transaction will result in a public listing for TMTG and proceeds of more than $1bn to pursue its agenda of “cancelling cancel culture” and “standing up to big tech”. There have also been reports — which the former president has strenuously denied on his social media platform — of financial trouble at Trump’s media venture.