Earlier this morning, the majority of shareholders of the publicly-traded Digital World Acquisitions, voted YES to approve a merger with Trump Media & Technology Group, the owner of Truth Social.
With the approval, Donald Trump is now 1 and 3 when it comes to winning the popular vote. More importantly, he now officially owns 79 million shares in a soon-to-be public social media company that will trade under the ticker symbol "DJT." As I type this article, Trump's 79 million shares are worth $3.24 billion based on DWAC's current price per share.
But here's the extremely urgent question: Will this gusher of paper wealth help Donald Trump pay the $464 civil judgment he owes to the New York State Attorney General by Monday? Will this windfall help stave off the NY AG's planned seizure of two crown jewels from Trump's property portfolio?
(Photo by Drew Angerer/Getty Images)
What Exactly Just Happened?
Let's start with some basics. After getting banned by Twitter in January 2021, Donald Trump launched his own Twitter-like social network called Truth Social under a parent organization called Trump Media & Technology Group (TMTG). In October 2021, TMTG announced its intention to go public by merging with an already-public holding company called Digital World Acquisitions Corp (DWAC).
DWAC is known as a "special purpose acquisition company," aka "SPAC." Long story short, a SPAC company goes public with no assets or businesses. People buy the stock based on the company's plans to eventually buy or merge with some private company. There's usually a deadline. And if the SPAC doesn't find a target by the deadline, it returns all of the money it raised to shareholders, no harm, no foul. From pretty much day one, DWAC planned to SPAC merge with TMTG. That was 2.5 years ago. DWAC approved at least two deadline date changes to get to a vote that just happened this morning.
Today, shareholders in DWAC were asked whether or not they wanted to merge with TMTG. Obviously, they voted YES, because DWAC's entire reason for existing has been to TMTG. With shareholder approval, TMTG blends into DWAC to become a public company without the hassle of needing to pay a ton of money to conduct its own independent IPO process. With that single vote, TMTG will be absorbed into DWAC next week. The combined new company will change its ticker symbol to "DJT."
$3.239 Billion Windfall
With the shareholder approval, Donald Trump now owns just under 79 million shares of the combined entity, roughly 58% of the total company. That makes sense because DWAC previously owned no assets or businesses. The combined company's only meaningful asset will be Truth Social. FYI, according to its latest SEC filings, Truth Social lost $26 million in the third quarter of 2023, on $1.1 million in total revenue.
As I type this article, DWAC's price per share is $41. So Donald Trump's 79 million shares are worth $3.239 billion. Prior to the shareholder vote, our estimate for Donald Trump's net worth was $2.3 billion. We just raised our estimate to $5.5 billion. That's sort of where the good news stops for the former President.
$464 Million Judgment Due Monday
After losing a civil fraud case brought by the New York State Attorney General last month, Donald was ordered to pay a $454 million fine. The judgment has grown to $464 million with interest. According to the terms of the proposed SPAC merger, insiders like Trump are locked up for six months. In other words, according to the company's rules, Donald can't sell any of his $3.2 billion worth of shares until roughly late September. Trump is also not allowed to use his shares as collateral for a loan. He also has not been able to get a private lender to put up the cash on his behalf using his real estate assets as collateral. So if he could somehow use his newfound $3 billion windfall, it would be really, really helpful to Trump.
On the plus side for Trump, the rules restricting insiders from selling or lending shares could easily be lifted by the DWAC/TMTG board of directors, which he very much controls. If Trump could then find someone to put up $464 million on his behalf in exchange for holding on to $500-600 million worth of his locked-up shares, that would be a perfect solution. The obvious risk here for the lender is the value of the stock dropping significantly between now and September when the lock-up expires.
If Donald does not come up with $464 million in cash by Monday, the New York Attorney General has already filed pre-judgments in Westchester County, New York. What's in Westchester? Two crown jewels in the Trump portfolio:
1) Seven Springs Estate: A 200-acre private estate dating back to the 1900s. Trump has owned the property since 1995, when he bought it for $7.5 million. The current appraised value of the property is likely north of $50 million, south of $100 million. The value of Seven Springs was a central point in Trump's fraud conviction. Seven Springs is a private residence for the Trumps. It is not also a public club like Mar-a-Lago, a golf course, or a condo/commercial space like Trump Tower.
2) Trump National Golf Club Westchester: A 180-acre, 18-hole golf course with a 75,000-square-foot clubhouse.
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