Any fresh capital would add more funding to launch the media conglomerate,which plans to initially get off the ground with a social network called Truth Social that would give Trump a platform after he was banned from Facebook and Twitter. PIPEs also help to lend credibility to special purpose acquisition company mergers and can provide a cash buffer if early investors decide to redeem their shares.
Traditionally,PIPEs are priced at $US10 a share,in line with the initial public offering price of most SPACs. But day traders and Reddit enthusiasts have helped fuel a spectacular rally in Digital World shares,which reached a closing high of $US94.20 last month before levelling out to recently trade around $US60. In light of those gains,any PIPE is expected to price above $US10,one of the people familiar with the matter said.
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The prospect of lucrative profits could lure investors in. A Digital World representative declined to comment,while a spokesperson for Trump Media didn’t immediately respond to a request for comment.
The two entities said last month that their merger agreement valued the combined company at $US875 million,including debt,with the potential for an earn-out that values the company at exactly double that,or $US1.7 billion.
Growth plans for Truth Social -- set to launch in beta mode this month and roll out throughout the US in the first quarter of 2022 -- are initially set to be funded by the SPAC’s cash in trust of $US293 million,they said at the time.