Trump Takes Advantage
of Wall Street Fad to
Bankroll New Venture
A merger with a so-called blank check company is poised
to give the former president access to hundreds of millions
of dollars.
SPACs.
Special purpose acquisition companies are the reverse of initial public offerings. Sometimes called blank-check companies, SPACs go public first and raise money from investors with the goal of finding a private company to merge with. Those investors have no clue about what that merger partner will turn out to be.
Raise...money...first. Goal--merge with private company....Investors no clue who. Why would any investor do that? What if the SPAC doesn't find a company to merge with? Do investors get their money back? What if the SPAC doesn't really try real hard to find someone to merge with and instead runs off with investors' moolah?
Which led some of the prominent investors in a SPAC called Digital World Acquisition — including the hedge funds D.E. Shaw and Saba Capital — to the surprising realization that they were financially backing Mr. Trump’s latest company.
...
Digital World, which was set up shortly after Mr. Trump lost the 2020 election, last month raised nearly $300 million, largely from big investors. Assuming the merger is consummated, that money will soon be bankrolling the Trump media venture, which plans early next year to offer a Twitter-like social media app.
...
...Trump’s new company, Trump Media and Technology Group — incorporated in Delaware in February with little fanfare, and with no revenue or tested business plan — reached a deal to merge with Digital World on Wednesday.
...
Shares of the newly merged company soared on Thursday, rising more than 300 percent to close at $45.50 a share and partly reflecting expectations that the former president’s media company could be very profitable.
SPACs have long had a dubious reputation [sounds like they found the perfect partner] because they give struggling or untested companies that would otherwise not find backers a pathway to the public markets.
I request a statement of particulars the ways that makes SPAC's of dubious repute.
...in recent years, [they've existed for "YEARS."] these lightly regulated [I bet I mean invest] entities have become all the rage
because with interest rates remaining low,
investors are eager for new places to put their money to work.
I see. So because the yield on Treasury notes, CD's, whatever is so low they're putting their money into SPACS. But why not the fucking stock market? Mutual funds? Quick bug-itis?
In the past two years alone, such companies have raised $190 billion from investors.
...
Digital World’s founder and chief executive is Patrick Orlando, who previously worked for Deutsche Bank and other Wall Street firms. More recently, Mr. Orlando, who is based in Miami and knew Mr. Trump before the deal, according to one of Mr. Orlando’s colleagues, has launched three other blank-check companies. While they have raised money from investors, not one has completed a deal. ...
Now, are "knew Trump before" and Orlando's oh-fer track record with SPACS, signals to us readers that this deal is shady shadier than the "normal"?
When Digital World went public on the Nasdaq stock exchange last month, it didn’t have the assistance of a brand-name investment bank. Instead, it turned to a small firm that until recently was called Kingswood Capital Markets.
Kingswood?! They stole my porn name!
This summer, Kingswood changed its name to E.F. Hutton...
Serious? How could they change their name to E.F. Hutton? WHAT DO YOU MEAN THEY “CHANGED THEIR NAME TO E.F. HUTTON”?! Also, could I have Kingswood back then?
Joseph Rallo, E.F. Hutton’s chief executive, didn’t respond to requests for comment.
?How could they do that? You just adopt an existing company's name? Now THAT sounds dubious!
With the help of bankers at the newly renamed E.F. Hutton, Mr. Orlando and Digital World lined up 11 hedge funds and other institutional investors to serve as so-called anchor investors. They agreed to buy substantial slugs of shares in Digital World’s public stock offering on Sept. 8.
As is standard in “blank check” deals, the investors in some cases ponied up as much as $30 million without much guidance as to how Digital World would spend their money, officials at several of the hedge funds said. All they knew was what Digital World said in its securities filing — that it was looking to invest in “middle-market emerging growth technology-focused companies.” It didn’t give any hint that it was hoping to merge with a social-media company or to work with the former president.
The machinations of financial markets are mystifying, aren't they?
