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WILMINGTON, Del. (Reuters) – A former executive of a blank-check acquisition company planning to take Donald Trump’s social media company public is suing, according to a lawsuit filed in Delaware on Thursday. , requested that the transaction be blocked until he received a larger payment.
ARC Global Investments II, controlled by Patrick Orlando, said the number of shares Digital World Acquisition Corp (DWAC) should receive once it merges with former President Trump Media & Technology Group (TMTG) has been shortened. .
It asked the Delaware Chancery Court to expedite the case to resolve equity issues before DWAC shareholders vote to approve the deal on March 22.
DWAC shares closed down about 9% Thursday at $41.16.
Orlando, as well as DWAC and the Trump Organization’s legal teams, did not immediately respond to requests for comment.
ARC’s lawsuit comes after DWAC warned Orlando earlier this month that the deal could be delayed.
Trump’s media companies and DWAC sued ARC and Orlando in Sarasota, Florida, on Tuesday, accusing him of trying to block a merger expected to close next month and “obtain a windfall through extortion.”
At issue is the rate at which ARC’s Class B DWAC shares are converted into Class A shares at the closing of the merger. Orland’s ARC said each Class B share should receive 1.78 Class A shares. DWAC said the ratio was 1.34. The company said in a regulatory filing that the difference between the two ratios was more than 2.5 million shares.
DWAC asked the Florida court to declare 1.34 as the correct ratio for converting ARC stock.
Separately, Trump’s company is being sued by Andy Litinsky and Wes Moss, two former contestants on Trump’s reality TV show “The Apprentice” for allegedly A partnership with United Atlantic Ventures holds stock in Trump’s company.
The pair said they received TMTG stock to help launch the company.
They claimed that Trump’s TMTG authorized an increase in its share capital from 120 million shares to 1 billion shares to enrich Trump’s interests and dilute his 8.6% stake to less than 1%. They called it a “last-minute stock grab” by the former president as he faces soaring legal bills.
Trump has been hit with more than $500 million in damages in two separate New York verdicts in recent months. His lawyer said Wednesday that he would not be able to pay the full $454 million bail required in the civil fraud case.
Earlier this month, the U.S. Securities and Exchange Commission approved the merger of Trump’s company, which operates the Truth Social messaging platform.
The combined company could be worth $10 billion, and the former president’s stake could be worth billions.
DWAC signed a merger agreement with Trump’s company in October 2021. Since then, it has been the target of an investigation by the U.S. Department of Justice and reached an $18 million settlement with the SEC for inaccurate information disclosures.
Since signing the merger agreement, the company has fired Orlando and reorganized its board of directors, blaming him for difficulties in completing the merger.
Trump’s company has been losing money since agreeing to the deal.
TMTG reported an operating loss of $10.6 million in the first nine months of 2023 after losing $23.2 million in 2022, according to a regulatory filing earlier this month. The bank borrowed $40.5 million to raise funds. .
TMTG also issued up to $9.2 million in additional convertible promissory notes to reward top executives, documents show.
(Reporting by Tom Hals in Wilmington, Del.; Additional reporting by Greg Rumeliotis in New York; Editing by Thomas Janowski and Daniel Wallis)
Copyright 2024 Thomson Reuters.
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