A legal dispute between Donald Trump and a former business partner is reaching a critical juncture, as a crucial vote looms to determine whether the former US president can capitalize on a potential $3.5 billion windfall by taking his Truth Social network public through the company Digital World Acquisition Corporation (DWAC).
Scheduled for Friday, the shareholder vote will decide on a deal between DWAC and Trump Media & Technology Group. However, Patrick Orlando, whose Arc Global Investments is the largest investor in DWAC, has refrained from casting his vote, creating a standoff.
Orlando, a former CEO of DWAC and a board member has threatened to withhold his support for the transaction. In response, DWAC filed a lawsuit against Arc Global, alleging that Orlando is holding the vote “hostage for his personal financial gain.”
The surge in DWAC’s shares, up 145% since the beginning of the year, has elevated the valuation of TMTG, the company set to go public, to approximately $9 billion.
Despite a lock-up agreement restricting Trump from selling his shares for six months, his substantial stake could offer crucial financial relief if the deal proceeds.
Orlando’s influence is significant due to the free shares he received for establishing DWAC. He controls 14.8% of DWAC’s outstanding shares, and without his backing, DWAC would need the support of nearly 60% of its remaining shareholders, primarily retail investors.
DWAC has faced challenges in rallying shareholder support in the past, and the company warned of potential difficulties in securing the necessary votes for the TMTG deal.
He was removed as CEO in March 2023, and the company settled a Securities and Exchange Commission investigation soon after.
Apart from Trump’s potential gains, hedge funds like Anson Funds, Mangrove Partners, and All Blue Capital, stand to profit substantially. However, some hedge funds declined to comment on their positions.
With the vote pending, Trump’s advisers are keen to avoid any issues, aiming for a smooth process before the anticipated trading launch next week.
