My THEORY re: Trump and the bond payment...

[WarGamer]

Many of you already know this but I'll summarize.

Now I'm going to really over-simplify this part.

In the stock market there are these groups of investors who form a company (A SPAC, special purpose acquisition company) that has the sole purpose of finding a company to merge with.

So a SPAC named DWAC made a deal with Trump to take his new company "Trump Media and Technology Group" public.

Part of the deal awarded Trump 79 million shares in the post merger company.

After several delays, the final vote for merger is this Friday, 3/22

When the merger is complete, Trump's stake in the company, 79 million shares is worth around $2-3B

Earlier this year when DWAC was 50/share it was closer to $4B

SO my theory is... if/when the merger is complete, on Friday... Trump has a deal worked out with an insurance company to hold his stake or a portion of it as collateral for the Bond.

There is a 6 month waiting period before Trump or the insurance company can sell it however.

But 6 months is still before the election...

And knowing the market like I do... I think retail traders, AKA Trump fans will pump up the price of the stock after the merger and after the convention, etc...

The insurance company might demand an enormous amount of the stake... maybe $2B worth to cover the 500M bond due to the volatility of the company.

Also remember... after the merger, it's a perfect vehicle for foreign gov't to support Trump. FOr example the Saudi Sovereign Wealth Fund could buy $500m worth of shares to pump up the stock price.

That's my theory.

Deeper reading:

https://www.benzinga.com/markets/equities/24/02/37174641/legally-troubled-donald-trump-may-earn-billions-as-his-social-media-firm-gets-sec-nod-for-dwac-m

[Irish_Dem]

1. I smell a rat too about Trump and the bond story.

I just don't know what it is yet.

I like your theory. It is possible.

I wondered if he was going to go the pretend poor mouth route,
file bankruptcy and stiff all his creditors.

Having moved all his money off shore.

But I agree something is up.

[BigMin28]

2. Bankruptcy

Doesn't discharge a civil judgment. And the court put a financial overseer to monitor the Trump Organization. He can't sell anything or move money with court permission. So there is that.

[Irish_Dem]

3. Doesn't matter if he is broke.

They cannot get blood out of a turnip.

All of his properties are mortgaged and there will be taxes to pay on top of that.

People here are saying the court monitor can only oversee NY state transactions.
I don't know if that is true or not.

Someone also stated that the monitor has been asking Trump for financial documents
for all of his business enterprises, there are hundreds of these. Trump has not turned
them over.

Highly doubtful Trump will be honest or cooperate with the monitor.

[WarGamer]

4. Agreed! That's a real longshot... the DWAC thing is 100x more likely

[Xolodno]

13. I think he's had his money offshore long before the lawsuits.

And all under layers of shell companies. He probably just has some token assets here in the USA and I bet a good portion of them are mortgaged.

[Irish_Dem]

14. Yes I think he judgement proofed his assets a long time ago.

Heavily mortgaged them and moved all the money into one of his many shell companies off shore.
His money could be in Moscow and Saudi.
Maybe China.

[LetMyPeopleVote]

5. Trump-Linked Digital World Acquisition Hits 7-Week Low As Ex-President Struggles To Secure Bond In Civil Fraud Case

The market seems to be concerned about the lack of a bond

Link to tweet

https://www.benzinga.com/markets/equities/24/03/37810916/trumps-spac-for-truth-social-hits-7-week-low-as-ex-president-struggles-to-secure-bond-in-civil-f

On Monday, the stock of Trump-linked Digital World Acquisition Corp

What Happened: The shares of DWAC plummeted by as much as 8.74% to $35.58 on Monday, the lowest level since Jan. 30. This comes as Trump’s attempts to secure a bond to cover a $454 million judgment in a New York civil fraud case were rejected by 30 surety companies, bringing him closer to the potential seizure of his properties, Reuters reported.

Trump’s legal team proposed that he be allowed to post a $100 million bond while he appeals the judgment. Earlier this month, Trump posted a $91.6 million bond to cover a defamation verdict for E. Jean Carroll as he appeals a case stemming from her accusation of rape against him.

The market is correct to be concerned. This is low market cap stock that appears to be very overvalued given that there has been only losses and no real prospect of earnings in the foreseeable future. I would be surprised to see any major company take this stock as collateral.

The trouble with your prediction is that AG James has the ability to levy on and foreclose on TFG's stock at any time after March 25 unless a bond is posted. The fact that the stock cannot be sold by TFG will not prevent AG James from levying on and selling such stock in a foreclosure sale. I have done a number of private/public foreclosure sales of stock over the years and I am working on one such sale now. Under a series of SEC no action letters, AG James can hold a public foreclosure sale of TFG's stock in the merged entity and bid whatever price that she thinks this stock is worth. The result of such foreclosure sale will be that TFG would not have any ownership in the new merged entity which will have an effect on the value of the company in the minds of reasonable investors.

So far none of the 30 companies who rejected TFG's bond request have agree to take this stock as a collateral. I will be surprised to see any company taking the risk of taking a low cap/thinly traded stock with no earnings as collateral. This will be fun to watch.

[edhopper]

6. Interesting

Could be. Hope not.

[Wuddles440]

7. Highly likely.

And his camp will make such an announcement on Sunday or Monday.

[LetMyPeopleVote]

8. I am not the only one reading the SEC filings on the proposed merger

I have been following this transaction for a long while and have read the SEC filings. I really love the risk factors on why this transaction has issues. SPACs in general never really made sense to me and there has been no new SPAC for a while. This SPAC had issues from day one and the SEC finally approved the transaction after fining the company $17 million and having some of the original management leave.

Here is a good post by a someone who read and had a good understanding of the SEC filings for this merger.

Link to tweet

[WarGamer]

9. OMG a rando from Twitter with 900 followers...

That's like... a really good source

[Dave says]

10. Are you referring to MeidasTouch? He has 2.19 million subscribers on You Tube. Who does Twitter anymore?

[WarGamer]

11. no I'm referring to the Twitter guy with 900 followers.

[BannonsLiver]

12. Gee whiz.

What a surprise. Another post painting the most optimistic picture possible of Dump’s current pickle. It pairs well with the previously expressed “Ukraine should capitulate” views.

[Kingofalldems]

18. Didn't you know?

Trump always wins as does Putin.

[republianmushroom]

15. I'm betting he will post the bond at the last minute.

[lindysalsagal]

16. I assumed he got the rejections on purpose to keep from paying it

by going to outfits that he knew would reject him. It's "the Producers" strategy: Deliberately fail.

[Yavin4]

17. How many times has Trump "brought people in on a deal" only to have the deals go belly up.

Still amazes me that supposedly whip smart, finance guys cannot see that Trump is a bad investment, no matter what. No way would I do business with him. He's the definition of toxic.

[LetMyPeopleVote]

19. Vanity Fair has a good article on meme stocks and some of the problems in using this stock for a bond

I was amused to see that DWAC/Trump Media is classified as a meme stock where the value is due to personality and not due to the real value of issuer of the meme stock. This article is a good discussion of the meme nature of DWAC/TMT.
https://www.vanityfair.com/news/donald-trump-truth-social-media-merger

Trump’s financial future now hinges on some of the strangest fads in corporate finance—meme stocks, SPAC deals, and cult-of-personality investing. If Trump can find a way to act fast, it might just be the bailout he desperately needs.

Truth Social is a bad imitation of Twitter, where Trump was an unavoidable presence long before he ran for president. It’s chock full of stale red-pilled memes, MAGA conspiracy theories, and of course, Trump. That’s the main draw. Truth Social is the only place the former president now regularly posts his unfettered thoughts......

DWAC is best thought of as a meme stock. You may remember the meme stock fad from when retail investors on Reddit successfully coordinated a short squeeze with GameStop stock, before glomming onto a series of other millennial nostalgia brands like AMC Entertainment, BlackBerry, and Bed Bath & Beyond. Meme stocks are often publicly traded companies that attract an inordinate percentage of individual investors and their stock performance fluctuates in a way that’s significantly divorced from the reality of their underlying business. Combine those two trends and you’ll start to see why Trump’s media company could be valued at roughly $9 billion if it merges with DWAC.

Jay Ritter, a finance professor at the University of Florida, says meme stocks often depend on the “greater fool theory of investing,” meaning rational investors might buy in expecting the stock price to rise and betting that they can sell their shares to a greater fool willing to buy them at a higher price. In this case, however, Ritter speculates there is an inordinate number of individual retail investors compared to institutional investors, such as hedge funds, that normally own SPAC shares prior to a merger. “Here you’ve got ideology involved [too]—as far as I can tell, the vast majority of DWAC investors are Trump political investors, and they’re to some degree putting their money where their mouth is… My suspicion is most of them have bought the stock as a show of political support.” In this way, Trump is conducting yet another public fundraising from his supporters—this time through the public markets.

TFG is locked up and cannot sell or pledge this stock for six months following the merger. Even if TFG was able to pledge the stock the stock is so volatile that a bank would be crazy to take this stock as collateral.

The problem for Trump here is that when he tries to sell stock, it very well may tank the whole enterprise. (He’s technically restricted from selling stock for six months after the deal closes, but could get a waiver from the board of directors.) “The faster he sells and the more he sells the quicker the stock price will decline,” Ritter said. Another major problem would be if the deal to go public is stalled by a lawsuit—such as a recent one brought against Trump Media from embittered cofounders, who claim their share in the company was diluted by Trump and his allies.

Trump might be able to borrow money with his stock as collateral as a way to gain access to money more quickly, but he would have to either get an exemption from the post-merger company or just move ahead without one and hope that the board lets it slide, Ohlrogge said, since the terms of the agreement with DWAC don’t allow it. “If there were a bank that did take such a deal [allowing Trump to use his stock as collateral], it would raise serious concerns that the bank is doing it for reasons other than a belief it is a profitable lending opportunity,” he said. “Namely, it would raise concerns that the bank is doing it in order to win influence with someone who might become US president. If that bank were affiliated directly or indirectly with a foreign government, it would be even more concerning still.”

Any bank that made such risky loan would be subject to attack. Lawrence O'Donnell commented on Chubb's bond (which appears to be secured by cash) and after such criticism, Chubb backed out

Link to tweet

Link to tweet

This will be fun to watch