On the game show Who Wants to Be a Millionaire, contestants are given three lifelines to protect their chances of winning big, including asking viewers and calling friends. It was done. But for billionaire Donald Trump, a different kind of lifeline could keep his finances afloat.
Friday Axios report Trump Media and Technology Group, the parent company of social media platform Truth Social, has merged with a special purpose acquisition company (commonly known as a SPAC), becoming a publicly traded company after SPAC shareholders voted to approve the merger. It was announced that it was planned to be.
Trump may be able to secure a loan to get cash today — he is desperately needed to avoid selling or forfeiting other assets.
As is the case with technology companies that access the public markets, the social media company is not profitable and has low revenue, but the new company is expected to be valued in the billions of dollars, and Donald Trump The value of his stock exceeds that.of 3 billion dollarsif stock prices can stabilize.
And that’s a big “what if”.
This could help Mr. Trump not only hold valuable stock and increase his net worth, but also post the cash and bond required in the civil fraud judgment brought against him by New York Attorney General Letitia James. It means something.
According to reports, President Trump has entered into a six-month agreement known as a “lockup agreement” regarding SPAC stock. This is a standard provision to prevent insiders from selling newly listed companies. all at once and cause stock prices to plummet. The six-month lockup means Mr. Trump may not be able to sell his shares until around October after the merger closes.
But if boards waive lockup provisions, another lifeline could emerge: secured loans. Although the board does not want Trump to sell his holdings using freely tradeable shares as collateral (as opposed to shares under a lock-up agreement), Trump could secure a loan that would give him access to cash. Maybe. today — he is desperately needed to avoid selling or forfeiting other assets.
We can assume that this timing is no coincidence. The proposed merger has been controversial for years.according to SEC filingthe definitive merger agreement between Trump Media and Technology Group and Digital World Acquisition Corp. was entered into on October 21, 2021.
Since then, a number of dramas have prevented the merger from completing, including, according to Axios, “a multi-year saga involving civil and criminal litigation, extended shutdowns, postponed votes, and more.”
So it seems relevant that after so long, the merger would finally be completed at a time when President Trump needed a financial lifeline.
There is a deadline on Monday to post a bond that would allow Trump to appeal the ruling without having his assets seized. Trump’s lawyers reportedly said he had already been turned down by 30 companies offering bonds.
Many hurdles remain. One is that the merger may take a long time to complete and it may be too late to do a deal. Another is the potential for stock prices to fall once trading begins under the newly shuttered entity. This could be too risky for President Trump to take out any type of secured “margin” loan, let alone a loan large enough to meet his needs.
For Mr. Trump, the merger could be his last lifeline to protect his assets, but it may very well be too late. We will see if the board can move quickly enough and call a friendly financial services company that will consider the new shares as sufficient collateral.
