With the news Friday that the merger between Trump’s Truth Social and DWAC (the entity created to take it public) was approved initial reaction was it didn’t matter because Trump wouldn’t be able to sell shares for six months. That’s normal practice. However, additional news came out that the board could waive that six month holding period (it’s meant to stabilize things before the public/investors start buying shares) and start selling shares right away. If you’re like me you assumed once again, like a greased snake he’d wiggle out of trouble and with an 8pm deadline sell enough shares to put up the $454 million to stop NY State AG James from starting to seize assets. Well, as the headline indicates that might not actually be the case.
Let’s take a quick recap. First, when news of the impending merger came out last week Truth Social share price dropped 12 percent. Even though in theory after the merger was completed Trump would in theory be several billion dollars richer that couldn’t have been a good sign for companies still thinking of issuing him a Surety Bond. A lot can happen in six months. Like Trump getting convicted for one thing. Also, let’s face it he’s mismanaged plenty of other stuff so while Trump would be theoretically worth several billion more the operative word is theoretically.
According to USA Today, Digital World Acquisition Company (DWAC), the SPAC that plans to list Trump Media and Technology Group (Truth Social) on the stock exchange approved the merger Friday. It’s said Trump’s majority stake in the company is valued at roughly 3.6 billion. The article goes on to note the windfall could prove vital with Trump trying to deal with the financial fallout of a string of legal cases against him, including the $454 million judgment in his New York State civil fraud case. There is however a fly or two in the ointment:
While the next step would be for the deal to be completed next week, its future is fraught with uncertainty. Digital World’s former CEO Patrick Orlando and former Trump business associates Andy Litinsky and Wes Moss have separately sued to block the merger, arguing they are entitled to more shares for their previous work on the deal.
I’ll freely admit I don’t know much about how all this works, but I’m sure companies that might have issued a bond knew about the ability to waive the six month waiting period. They also knew doing so would likely drive the stock value down quite a bit more than the twelve percent hit it had just taken. So there’s that. And that lawsuit might, despite the SEC having recently given a greenlight for the merger process to move forward complicate Trump being able to sell $500 million worth of shares tomorrow. Again this is all outside my wheelhouse and if I’m being stupid I trust those who know much more will correct me and explain why I’m wrong. In the meantime, here goes:
Remember that blaring tweet from him about through hard work, sweat blah blah blah he now had five hundred million in cash? I wouldn’t be surprised to learn Trumpty Frumpty Dumpty thought it would be that easy. That his “board” would “meet” this weekend and approve waiving the normal six month waiting period. And that long before the close of trading he’d clean up in the stock market, and be able to transfer the required money into escrow. Problem (temporarily at least) solved.
I still don’t think a bonding agency will touch him. Not even a group of them putting up partial bond to cover the amount needed. That leaves the stock sale except as I said the value is almost certainly going to plummet more because even the village idiot knows every dollar will go NOT to improving Truth Social but to Trump’s legal expenses and his Presidential campaign. Genuine concerns are being raised and with them potential complications to a quick windfall for Trump:
Trump’s own financial landscape is complicated by an imminent $454 million bond in a civil fraud case. His public stance on social media suggested he would not liquidate assets to cover the bond, emphasizing the cash would be channeled towards his presidential campaign. The lock-up period typical in SPAC transactions, which prevents insiders from selling shares for six months post-merger to ensure market stability, further restricts Trump’s immediate liquidity and ability to leverage his stake to address legal financial obligations.
However I think there’s another and more interesting question. One that might have the SEC getting involved again.  In order for Trump to start selling shares and personally collecting money from the sale of those shares the board must approve waiving the six months. That begs the question of how in the hell such a meeting took place at all? One of the Directors pled guilty to perjury in the NY fraud case and is headed back to jail. (Sentencing is scheduled for April 10) so I have to wonder whether he could secure permission to travel out of the jurisdiction for a meeting. And the others? It would be worth doing some checking on where everyone was. I wouldn’t be at all surprised if no meeting has taken place.
Nor would I be surprised to learn that a week or even more back it actually DID. A “just in case” meeting where the posted dated paperwork was signed and put into the proverbial “open in case of emergency” safe. If so that’s fraud. A whole NEW set of charges. Worse, fraud vitiates any contract. Trump would have investors, shareholding and even the SEC suing him. In the meantime the State of New York could go to the judge and claim since Trump committed fraud they were entitled to go ahead and collect the judgement!
Why would I even think such a thing? It’s that post Trump made about having worked so hard to come up with the cash. He didn’t want to have to put up money from a stock sale he planned all along to start this week. He needs every bit of that money for other (mounting) legal expenses and his campaign. Remember he had to cancel rally last week because his campaign couldn’t afford it! He still hoped that promises he made to insurers that could put up bond for him about the “vast riches” he would have rolling in were met with skepticism. Or, as Fredo 2 aka Eric Trump told Maria Bartoromo “laughter.” I’m guessing it was more along the lines of that classic line from the movie where the agent’s client said “SHOW ME THE MONEY!”
In any case it could be quite the morning tomorrow. Unless I miss my guess legal pundits will either themselves or have interns camped out at the courthouse looking for legal filings. As in requests for injunctions from those guys who said they got screwed out of stock. Or investors who know the value of Truth Social will plummet even more due to this “I need lots of money NOW!” cash grab and feel defrauded. Maybe even the SEC if they start to wonder as I have speculated here that the meeting approving waiving the six month waiting period for Trump to collect money from stock sales happened before the merger was officially completed. Trading on the stock exchange doesn’t begin until 9:30am. There might be one or more emergency injunctions signed by then to keep Trump from selling a single share.
Stay tuned.
The Big Short 2.0???