Is Trump about to get a $3.5 billion windfall from the merger of his Truth Social platform with a public shell company? He sure needs it.
Truth Social is Donald Trump’s soapbox. Could it also be his lifeline?
Earlier this week, I explained that, unless a New York appellate court intervenes, the former president and putative GOP 2024 presidential nominee faces a Monday deadline to post a roughly half-billion-dollar bond. Otherwise, Attorney General Letitia James, an elected progressive Democrat, has vowed to begin enforcing the $454 million judgment the state won in a civil fraud trial last month, pursuant to the ruling of Judge Arthur Engoron, an elected progressive Democrat.
Trump has been attempting, without success, to cobble together a bond to stave off enforcement while he appeals.
Though he is a wealthy man, Trump is cash-strapped, having just posted a $91.6 million bond to prevent the writer E. Jean Carroll from enforcing the $83.3 million judgment she just won against him in a federal jury trial (over the damages stemming from two instances of defamation, after a separate jury last year awarded Carroll $5 million in damages upon finding Trump liable for sexual abuse and a different instance of defamation — a verdict Trump is also appealing, after posting a $6 million bond).
Besides these judgments, Trump faces challenges in his business — he reportedly has about $250 million in loans coming due this year, meaning they must either be paid off or renegotiated. And of course, his prospects are unclear: He could be elected president, he could be convicted and sentenced to prison in one or more of four criminal cases he faces, or some combination of both could occur.
His immediate problem is the Monday bond deadline: He has been unable to persuade bonding companies to risk backing a bond of the size he needs; they want cash, not real estate, as collateral, and he doesn’t have enough.
But he may be in for a huge payday. The questions are: Will it happen? And will it happen soon enough?
As I related in the above-linked column, on Friday, Digital World Acquisition Corporation (DWAC) is scheduled to vote on whether to approve a merger with Trump Media and Technology Group (TMTG), the private company that owns Truth Social, the former president’s social-media platform. DWAC is what’s known in securities law as a SPAC — a special acquisition company, really a shell public corporation that exists for the purpose of acquiring a private company and taking it public. This allows the private company, such as TMTG, to get the immense financial benefits of trading on public exchanges without making the extensive disclosures required by a private company that goes the more conventional IPO route (i.e., an initial public offering, which is closely scrutinized by the SEC).
The Wall Street Journal reported last night that Trump supporters have been bidding up DWAC shares in a manner reminiscent of so-called meme stocks. Earlier this week, I noted ominously that, as the merger vote loomed, the stock price was suddenly down to $35.58 after trading at over $40 a week earlier. Well, it’s booming again, surging by 18 percent to nearly $43 yesterday. It matters a lot because Trump is the majority owner of TMTG and would thus own about 60 percent of the stock in the merged company — which would trade publicly under his initials, DJT.
I suspect the current surge is a mirage: Truth Social has been a suspect venture, it is not competitive with other social-media platforms (it’s basically Trump posting, and he has only a small fraction of the followers he had on Twitter, now X), and the merger has been plagued by legal problems and interminable delays. Still, at least as of this moment, Truth Social would be valued at about $6 billion, so Trump’s stake would be $3.5 billion.
Trump’s shares would be locked for about six months. That’s an agreement he had to make: If it were publicly perceived as his selling his stake and bolting, the newly merged company would be worth closer to 6 cents than $6 billion. But he could get permission from the board (which he would no doubt dominate) to borrow against his stock.
There are hurdles here. The merger may not happen — it has had to be postponed several times because DWAC principals got cold feet. If the merger happens, it may take time for Trump to work out how he could exploit the value of his equity. And as the Journal notes, it is unclear whether bonding companies would accept stock in the newly merged company as collateral for a half-billion-dollar bond.
On the other hand, Trump is in desperate straits. According to a New York Post report yesterday, Trump insiders say he is resolved not to declare bankruptcy during the presidential campaign; but if he does not get relief from the appeals court — which could enjoin James from enforcing the judgment for now, even if Trump can’t post a bond in the full amount — he may simply cease efforts to obtain a bond, allowing James to begin seizing such assets as Trump Tower in midtown.
New York progressives would crow, but such crass asset seizures after a patently selective civil prosecution and outrageous decision — $355 million in “disgorgement,” plus $100 million in interest, which continues to accrue at about $112,000 every day, in a case in which James proved zero fraud victims — could damage the Biden campaign. Democrats have to wonder, as voters across the country evince increasing unease over the lawfare crusade against their Republican rival, whether they’ve overplayed their hand.