Digital World (NASDAQ:DWAC) revealed in an 8-K filed this afternoon that $138.5 million worth of investors in their $1 billion PIPE have opted to not participate going forward.

The original $1 billion convertible preferred had an Outside Date of September 20, 2022, at which time any of the PIPE investors could terminate their respective subscription agreements. This leaves $861.5 million currently subscribed, however, remaining investors still have the ability to file termination notices in the future. Today’s 8-k unfortunately did not note which investors have opted to terminate and how many investors that included. We would need to wait for any forthcoming proxy filings to see which remain.

However, what was noted in today’s filing was the following:

“Additionally, as reported in Digital World’s definitive proxy statement dated August 25, 2022, relating to its special meeting of stockholders, currently adjourned to October 10, 2022, it is possible that the parties will restructure the PIPE or renegotiate such arrangements in view of the PIPE closing conditions, evolving market and regulatory conditions.“

As shown above, this statement regarding restructuring or renegotiation was also included in the August 25th filing, but it has apparently been included again today for emphasis.  This may or may not be a case of “Chekov’s gun“, but there’s definitely the sound of some bullets rattling around in a chamber somewhere.

As such, FT has already reported that negotiations were purported to be in full swing.  Primarily around the preferred stock conversion price, which gets adjusted if the 10-day VWAP on the share price is below $56. The rumored negotiations involve a new floor conversion price of $2.00, down from the original $10.00.  However, this seems unrealistic from both an TMTG optics viewpoint (Trump will hate it) and from a public SPAC shareholders viewpoint. The impact of dilution from a $2.00 floor would most likely negatively impact the DWAC current share price which has already come down significantly from it’s 52-week high of $175.00.  Today, DWAC closed at $16.50.

Having said that, this deal has had more left turns than a doorknob.  DWAC also has their extension vote on the horizon and it is currently scheduled for October 10th. Keep in mind that TMTG is locked into this deal until at least December 8th. Between now and then, more DWAC news seems highly likely.