Digital World Acquisition Corp. (NASDAQ: DWAC), the special purpose acquisition company planning to take Trump Media & Technology Group Corp. (TMTG) public, has extended its deadline to finalize the merger from March 8, 2024, to June 8, 2024.
The extension, approved by Digital World's Board of Directors on February 29, 2024, is the third of four potential three-month extensions allowed under the company's charter.
The announcement comes amid a complex legal battle involving Digital World's former chairman and current board member, Patrick Orlando, and his firm ARC Global Investments II, LLC. The relationship between Orlando and Digital World has soured, with Digital World and TMTG filing a lawsuit against Orlando and ARC in Florida, seeking declaratory judgment on a disputed stock conversion ratio and damages for alleged interference with the merger.
Orlando and ARC have countered with a lawsuit in Delaware, asserting claims over the conversion ratio and alleging breaches of fiduciary duty by Digital World directors.
The dispute centers on the conversion ratio for Class B common stock into Class A common stock upon completion of the merger. Orlando and ARC initially claimed a conversion ratio of 1.69:1, but later revised it to approximately 1.8:1.
Digital World and its independent board members contend that the correct ratio is 1.34:1, as previously disclosed, and believe Orlando's claims are an attempt to extract personal benefits at the expense of Digital World's public shareholders.
If the court were to determine ARC's proposed conversion ratio of 1.78:1 valid, approximately 3,149,531 additional shares of Class A common stock would be issued to holders of Class B common stock upon conversion, potentially diluting the ownership of Digital World's public stockholders in the post-merger company.
The legal proceedings are in their preliminary stages, and the ultimate resolution of the disputed conversion shares is not determinable at this time. The information is based on a press release statement.
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