Donald Trump’s beleaguered SPAC deal is finally going through, and just in time to pay nearly half a billion dollars owed over several legal actions — if the board agrees to let him sell.

Let’s get all the acronyms out in the open. Digital World Acquisition Corporation (DWAC), a special purpose acquisition company (SPAC), has been in negotiations for years to merge with Trump Media and Technology Group (TMTG) and list on the NASDAQ as $DJT. But it has encountered obstacles in shareholder reticence, Securities and Exchange Commission (SEC) scrutiny, and even grand jury subpoenas.

And that’s without reckoning with the questionable success of Truth Social, the partisan social network hurriedly stood up after the former President was booted from Twitter. TMTG reportedly had a net loss of around $49 million in 2023, on revenues of under $4 million — not exactly hot numbers.

Various troubles caused the DWAC-TMTG merger to be kicked down the road over and over, and it was beginning to look like the shareholders would eventually walk away when the timing exceeded the bounds stipulated in the SPAC terms.

But today the companies filed the necessary paperwork with the SEC to consummate the merger. With DWAC stock having risen in anticipation of this event to more than $42 per share, and Trump the largest holder with $79 million shares, he could soon find himself owning $3 billion in equity in the new company.

The timing is certainly fortuitous for Trump personally. He must post hundreds of millions in bond very, very soon or face forfeiture of his assets as part of a major fraud case in New York, not to mention other damages, loans, and ongoing cases that may add to his debt. A $3 billion windfall would be welcome to him — if he can sell it.

Just one problem: a “lock-up” condition of the merger under which the board must approve any sale of stock by a company’s officers and major investors for the next six months.

There’s no doubt that many, many shareholders in the newly public TMTG will sell their shares as soon as possible. But if Trump wanted to finance his current liabilities, he’d have to sell some 12 million shares at the current price — around 15% of his total stake. Would the board approve this?

They’ll be sailing between Scylla and Charybdis: on one hand, a day-zero sell-off by Trump could drive the price down and trigger even more as people dispose of their shares before they drop below their purchase value. On the other hand, if Trump isn’t bailed out, he could conceivably go bankrupt, imperiling the enterprise from a different direction.

One potential out is for Trump to use his shares as collateral for a loan, with the understanding that they’d be sold in 6 months and not today. But that may depend on someone willing to speculate on the value of those shares six months from today — not a simple bet to make. If the company’s stock were to drop below, say, $8 — a deflation of value not at all uncommon in SPACs — Trump’s entire stake might not be worth what he owes in New York.

We don’t know exactly when $DJT will begin trading, but assuming all the paperwork goes through, it should be very soon. We’ll be keeping a close eye on this unusual and consequential deal.

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