The blank-cheque company that plans to take Donald Trump’s media business public has ousted its chief executive, deepening tumult inside a company that has been threatened with stock exchange delisting over unpaid fees.
Digital World Acquisition Corporation has lost 87 per cent of the $3.6bn valuation it commanded after announcing in October 2021 a deal to merge with Trump Media & Technology Group, which operates his Truth Social platform.
Since then, the special purpose acquisition company missed several deadlines for securing shareholder votes needed to proceed with the deal and resorted to borrowing millions of dollars from its own sponsors in a last-ditch effort to keep it alive. Federal prosecutors and the US Securities and Exchange Commission have opened investigations that Digital World has said could impede its planned merger.
Digital World said in a regulatory filing on Wednesday that it had “terminated” Patrick Orlando, its chief executive and chair, and cited “unprecedented headwinds” for the company. Orlando is a major DWAC shareholder and could make hundreds of millions of dollars if the deal is completed.
The Nasdaq stock exchange warned Digital World in February that it had failed to pay certain fees and was at risk of being delisted.
A list of non-compliant companies published by Nasdaq on Tuesday indicated Digital World had yet to pay the fees. The company has said it intends to pay any fees it owes, and is appealing the exchange’s demand.
The Financial Times reported in September that Digital World had failed to pay proxy solicitors Saratoga Proxy Consulting for its work to round up shareholders and build support for an extension to complete the deal.
The company’s recent troubles stand in sharp contrast to its euphoric early weeks, when Digital World announced a deal to acquire Trump Media less than a month after completing its initial public offering.
The deal appeared to be a standout success for Orlando, a little-known financial executive whose previous business interests have included a Peruvian biofuels plant and a sugar trading venture.
But Digital World last year said government investigations were likely to delay the deal, even as a one-year deadline for completing a merger neared. By last autumn Orlando was urging the company’s fragmented base of retail investors to submit paperwork that would allow for an extension, even sitting for an interview with Christian evangelist Chad Nedohin who began with a prayer thanking Jesus Christ for “blessing this investment”.
Orlando and a representative for Digital World did not respond to a request for comment. The board of the company has undergone turnover in the past few months, including the departure of two directors. Chief financial officer Luiz Philippe of Orléans-Braganza, a Brazilian parliamentarian and ally of Brazil’s far-right former president Jair Bolsonaro, has also left the company.
Orlando, whose firm Arc Global Investment is the sponsor behind the Spac, will be replaced by Eric Swider as interim chief executive. Orlando remains on Digital World’s board.