The merger deal, which could value Trump’s stake in the company at more than $3 billion, would offer the former president a financial lifeline at a time when he faces a $454 million civil fraud conviction in New York this month. are facing higher fines.
Representatives for Trump, Trump Media and Digital World did not immediately respond to requests for comment.
Andy Letinsky and Wes Moss, who met with Trump as contestants on his reality show “The Apprentice,” have since lost the White House to Trump in early 2021 over the idea of a Trump-branded tech startup and social media platform. They were banned. From Twitter, now called X.
According to a motion filed Wednesday in the Delaware Court of Chancery by the co-founders’ partnership, United Atlantic Ventures, Trump agreed to the deal and was given 90 percent of the company. The partnership held an 8.6 percent stake, while deal attorney Bradford Cohen was awarded the remaining 1.4 percent.
The motion said UAV operated the Trump media business, hired employees and raised funds while receiving no fees or payments for its work. And although Litinsky and Moss left Trump Media this year amid conflict with its current leadership, UAV retained its stake, according to a Securities and Exchange Commission filing with Digital World this month.
Trump was slated to receive 78 million shares in the post-merger company — worth $3.5 billion at today’s share price — and UAV would receive more than 7 million shares, the filing said. Which is worth about 339 million dollars. “Throughout TMTG’s corporate history,” the motion states, “the 8.6 percent ownership interest in UAV has been recognized and respected.”
But UAV’s lawyers allege in the motion that Trump recently sought to “drastically dilute” the partnership’s stake in what they called an “11th-hour, pre-merger corporate maneuver.” So that the quantity of authorized stock can be increased from 120 million. Shares 1 billion shares.
UAV’s attorneys wrote that the “weak scheme” had “no legitimate business purpose” and suggested that Trump and the Trump Media Board “planned to issue the new shares to Trump and/or his associates and children.” This reduced the stakes of the UAV. 1 percent
UAV was “promised 8.6 percent of this company and unfortunately its business partners are trying to renege,” said Christopher J. Clark of Clark Smith Villazor, the partnership’s lead attorney. explained the lawsuit in an interview with The Washington Post. “They feel like: We’ve socialized the truth for you. You get 90 percent. But some people aren’t happy with just 90 percent.
Clark has represented high-profile defendants including Hunter Biden, Elon Musk and billionaire businessman Mark Cuban. After years of representing President Biden’s son in negotiations related to the Justice Department investigation, Clark resigned in August over the possibility that he might be called to testify as a witness on behalf of Hunter Biden. .
In the filing, Digital World said the proposed issuance of 1 billion shares of “New Digital World” stock was part of a set of business changes following the merger. The SEC announced this month that the merger’s registration statement was effective, clearing the way for Digital World’s shareholders to vote to finalize the merger at a meeting next month.
Digital World acknowledged the UAV dispute in an SEC filing, saying it had received letters last month from UAV’s counsel saying the partnership still had rights to appoint directors to Trump Media’s board and “additional TMTG The right to approve or disapprove the creation of Shares.”
UAV argued that its original services contract with Trump was effective through 2021, the filing said. Digital World said in the filing that the deal was “voided” by Trump’s lawyer “about two and a half years ago.”
Digital World said in the filing that Trump Media had stated that it “strongly disagrees with UAV’s assertion of any rights with respect to TMTG under the Services Agreement and believes that TMTG has potential rights over UAV.” There is a valid defense to the claims.”
A UAV representative sent a text message to a Trump media note holder this month suggesting that the UAV could try to “order” or block the merger, the filing said. The filing also states that an attorney for UAV sent a letter to the Trump media threatening “legal action regarding UAV’s alleged rights in TMTG, including, if necessary, ordering a merger.” Proceedings of”.
Digital World said in the filing that the legal dispute could prevent or delay the merger agreement, “significantly affect” the company’s future performance or “damage investor confidence and market perception.” can adversely affect.”
Delaware, where Trump Media was incorporated, is a common state for U.S. business registration, and its chancery court is an important base for corporate litigation.
A sealed legal complaint was filed in the matter late Wednesday. Under Delaware chancery law, it will not be made public for another five days as the two sides discuss possible mitigation. A copy of the motion for expedited action, which outlines the dispute, was publicly visible in court records.