Sat. May 28th, 2022

Donald Trump’s social media startup raised $ 1 billion from unidentified investors as the company continues plans to become known through a Spac merger.

Trump Media and Technology Group said on Saturday it had raised $ 1 billion in private investment in public equity (Pipe) financing, but did not name any investors.

In October, the former US president announced the launch of Truth Social, a social media platform without an existing application that intends to list by a Spac merger in New York. The move comes because Trump is still banned from Twitter, Facebook and YouTube after the Jan. 6 attack on the U.S. Capitol, and because the furious 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 fight back against the tyranny of Big Tech,” he added.

The TMTG company, of which Trump is chairman, will merge with the blank check company Digital World Acquisition Corp, which is managed by Patrick Orlando. The Spac raised $ 293 million when it listed on the Nasdaq Stock Exchange in September, and eleven hedge funds, including Saba Capital and DE Shaw, led by prominent Democratic party donors, participated in the offer, according to regulatory submissions.

The transaction’s Pipe financing far exceeds the Spac IPO return and is in the form of convertible preference shares. The conversion price is set at a 20 percent discount to the Spac’s five-day trading average share price before December 1, which sets the conversion price at around $ 35. Digital World traded as high as $ 94 per share and the hedge fund group millions made when it first listed on the Nasdaq Stock Exchange.

Digital World shares have risen well above their $ 10 share price in anticipation of the Trump media venture. Typically, Pipe Investments is announced along with the business combination. However, as Digital World waited to raise institutional capital, it was able to take advantage of the hype to sell the Pipe shares at much higher than the traditional $ 10 per share price.

The Pipe’s share price may rise or fall, depending on how Digital World trades and the proceeds between the Spac and the Pipe are expected to provide $ 1.25 billion to TMTG after expenses. The Spac shareholders will have the usual option to get their money back before closing the merger if they request it.

TMTG’s Truth Social platform currently has no application or business plan, but describes itself as allowing discussions “without discrimination on the basis of political ideology”.

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