Trump accused of diluting Truth Social shares in lawsuit, potential $3B payday at risk

Donald Trump can now add one more legal battle to his already full dance card.

The former president is being sued for allegedly trying to “drastically dilute” the value of stock shares in his social media company.

United Atlantic Ventures, a partnership that co-founded Truth Social, claims in the lawsuit Trump Media & Technology Group engaged in “wrongful 11th hour … maneuvering” to dilute UAV’s minority stake in the media company, according to CNBC.

“Former President Donald J. Trump … is causing TMTG to not only dispute UAV’s established right to 8,600,000 shares or 8.6% of TMTG’s issued and outstanding stock, but also attempting to drastically dilute UAV’s interests in connection with an impending merger,” a court motion said.

Citing the filing, CNBC reported that UAV’s current 8.6% stake “would be diluted to less than 1% as a result of the TMTG board approving an eight-fold increase in the total number of authorized shares in the firm, from 120 million shares to 1 billion shares,” CNBC reported.

“There is no legitimate business purpose for the Billion Share Authorization or the creation of non-voting stock in the face of the pending Merger, particularly because any unissued TMTG stock will be cancelled in the Merger,” the motion said, before adding, “The only plausible reason for TMTG to authorize this massive new block of stock and create non-voting stock is so Trump can dilute UAV and take the lion’s share of merger consideration for himself,” the motion says.

A planned $4 billion merger with a shell company called Digital World Acquisition Corp is at risk — if the merger is approved, the combined entity will be publicly traded, and Trump’s 90% stake in TMTG could reportedly be valued at more than $3 billion, given DWAC’s current share price.

Reuters reported that Arc Global Investments II, which is controlled by former DWAC Chairman and CEO Patrick Orlando, sued to block the merger on Thursday unless it receives a larger number of shares from the combination than DWAC proposes — TMTG and DWAC sued Orlando and his investment vehicle in Florida, according to the news agency, claiming he is trying to “obtain a windfall by extortion.”

Tom Tillison

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