A fresh business development at Trump Media, owner of the conservative-leaning social media company Truth Social, may help former President Donald Trump transform his paper wealth from the company into greenbacks.
Trump Media has entered into a “standby equity purchase agreement” with Yorkville Advisors, a New Jersey-based financial firm. It’s a somewhat sleepy term for a deal that could potentially lead to a financial windfall for the 2024 candidate.
“Marketplace Morning Report” host David Brancaccio turned to Justin Elliott, a ProPublica reporter who recently broke the news about Trump’s latest business dealings, to translate the financial jargon.
The following is an edited transcript of their conversation.
David Brancaccio: They’re setting up a standby equity purchase agreement. What does that do?
Justin Elliott: Yeah, so this is a sort of fancy-sounding and technical term for something that’s actually pretty simple, which is Trump Media is setting up an arrangement where, if it decides to, it can sell a bunch of new shares of itself to the public to raise cash for money.
Brancaccio: OK, so you know, stock is a part of a company and it can hive off some more, and if it sells it, money is raised. Who does that benefit?
Elliott: I think the striking thing about Trump Media to me, which I think a lot of people still don’t understand, is that Donald Trump owns around 60% of this company, and his stake at current market prices is worth roughly $4 billion, which is actually now the majority of his fortune. So if this company is able, through this deal, to raise cash — through the deal, they can raise up to $2.5 billion — if that actually happens, Donald Trump owns 60% of a company that has $2.5 billion of cash. So I would say this would benefit former President Trump more than just about anyone else.
Brancaccio: Now, when Trump Media went public in the spring, I remember us reporting that Donald Trump didn’t have actual access to some of this wealth. It’s paper wealth, and it wasn’t liquid. Would this be more liquid?
Elliott: The situation with former President Trump’s shares right now is he’s in what’s called a lockup period. Even if he wanted to sell some of his shares in this company for money, he’s not allowed to do that until the end of September. But there’s nothing stopping the company from issuing new shares of itself for cash, and then what the company does with that money that it raises is up to the company, and Trump controls the company. So the company could raise money and go out and make an acquisition, buy another company. Or if Donald Trump, let’s say, wanted some actual cash, the company could issue a dividend. So I think the thing about Donald Trump’s stake in this company right now is that it’s very vulnerable to the volatility of the market. If this stock crashed tomorrow, Donald Trump’s $4 billion stake could go down to something much less than that. If the company goes out and sells new shares for actual cash, then it has something concrete. It essentially locks in some of these gains for Donald Trump that are currently on paper.
