Some investors are backing away from Digital World Acquisition Corp’s plan to buy former U.S. President Donald Trump’s social media company Truth Social, the special purpose acquisition firm said on Friday.
Digital World said it had received termination notices from holders of private investment in public equity (PIPE) ending commitments for almost $139 million of the total $1 billion it had previously announced.
Investors, who signed the PIPE pledge about a year ago, are free to move their money after the September 20, 2022 deadline if the deal has not been completed.
Digital World did not disclose the investors who pulled out. The sources told Reuters that Sabby Management, which had pledged to contribute $100 million to PIPE, is one of the investors who have pulled out.
Sabby Management declined to comment.
More investors could pull out in the coming weeks, the sources said, as they can terminate at any time after the deadline. Many are waiting for DWAC to propose more preferential terms to PIPE investors, the sources added.
The deal between the special purpose acquisition company (SPAC) and Trump Media and Technology Group (TMTG), which owns Truth Social, has been on ice due to civil and criminal investigations into the circumstances surrounding the deal.
TMTG did not immediately respond to a request for comment.
The SPAC was hoping that the US Securities and Exchange Commission, which is reviewing Digital World’s statements about the deal, would already give its go-ahead. Digital World said this month that it would extend the life of the deal by three months, after its proposal for a 12-month extension to its shareholders did not receive sufficient support.