Equities

Trusts tied to GoPro's founder lent it $20 million in July. Its sale would repay them and cash out their warrants

GoPro's merger proxy says the $1.14-a-share deal repays notes held by trusts tied to CEO Nicholas Woodman and cashes out their warrants, estimated at $21.9 million. His votes alone can approve it.

By Brandon Cole · Oct 26, 2026, 6:00 AM EDT

Why it matters: GoPro's sale, which its CEO's votes alone can approve, would repay trusts tied to him and cash out their warrants, estimated at $21.9 million.

For information only, not investment advice. Prices delayed.

Tickers: GPRO

GoPro ($GPRO) is trying to sell itself, and its own paperwork explains why. The board believed that, without a deal, the company "faced a significant risk in the near term of being unable to meet its obligations as they became due" and could end up in "an out-of-court restructuring or a proceeding under the U.S. Bankruptcy Code, in which holders of Common Stock could receive little or no value," according to GoPro's preliminary merger proxy, filed with the SEC on Oct. 19.

The filings also show, in unusual detail, who gets paid when the deal closes and who decides whether it does.

The deal

GoPro agreed on Sept. 1 to merge with Action Acquisitions LLC and Starman Optical, Inc. Under the proxy, each GoPro share becomes "0.1 of a validly issued, fully paid and nonassessable share of Class A common stock of the Surviving Corporation" plus "$1.14 in cash," subject to a possible working-capital adjustment. GoPro's Sept. 1 press release put the aggregate cash at $285 million and said shareholders would keep about 10% of the company, with roughly $92 million of GoPro debt "repaid in full at closing."

The proxy calls the $1.14 a premium of about 30% to the Aug. 31 close.

The proxy is specific about how banker Houlihan Lokey judged the price. Its wind-down analysis put GoPro's equity at $0.06 to $0.95 a share, and "with the consent and approval of our Board, Houlihan Lokey evaluated the Merger Consideration solely on the basis of a comparison" of that range to the $1.14. Houlihan's fee is estimated at about $6.7 million, "a substantial portion of which is contingent upon the consummation of the Merger."

The money comes from Midtown Equities LLC, which the proxy calls "an independent third party not affiliated with Parent or Merger Sub." Midtown has committed cash for the deal. Woodman is expected to resign as CEO and from the board.

The July loan

In late June, the proxy says, "the Company determined that it would need at least $20 million to continue operations in the near term until a transaction could be consummated." The money came from entities tied to its own chief executive.

A July 8 8-K says GoPro agreed on July 1 to sell $20 million of senior secured notes to "certain entities (the “Buyers”) affiliated with Nicholas Woodman," the company's CEO and chairman. The buyers also got warrants for 25,706,940 Class B shares. The notes pay 6.50% a year, paid in kind by adding to the principal, mature July 21, 2028, and are backed by "a third lien security interest in substantially all the assets of the Company." The warrants carry a $0.7780 exercise price and can be exercised early after the company's first public announcement of a change of control.

The key clause: in a fundamental transaction, the 8-K says, holders can require GoPro or its buyer "to purchase the Warrant for cash in the amount of the Black Scholes Value of the unexercised portion of the Warrants." Black-Scholes is a standard options-pricing formula.

Woodman's Schedule 13D, filed Sept. 9, shows the Woodman Family Trust's part: a $15 million note plus, "as part of the same investment unit and without the payment of additional cash consideration," a warrant for 19,280,205 Class B shares at $0.778. It "became exercisable following the Issuer's public announcement of its entry into the Agreement and Plan of Merger." The proxy names the holder of the other note and warrant as The Terrapin Trust.

The proxy says the audit committee "reviewed the terms of the warrants," including that a sale would let holders demand cash at Black-Scholes Value, and then "approved the warrants."

What the merger pays

The proxy is plain about this part: "In connection with the Merger, the Terrapin Senior Secured Note and the Woodman Senior Secured Note will be repaid in full." The merger also counts as a "Fundamental Transaction" under the Class B warrants, so their holders can make the buyer purchase them for cash.

How much? "Assuming a Closing Date of October 9, 2026," the proxy says, the Black-Scholes Value of those Class B warrants "is estimated to be $21.9 million." That is the company's estimate, not ours, and the proxy notes the actual figure "will be determined as of the Closing Date."

The proxy estimates the cash-out for all warrants being bought out, including one held by lender Mateo Financing, at $33.6 million under the same Oct. 9 assumption.

Woodman also holds GoPro shares. The proxy puts the cash consideration for the shares he beneficially owns at $30,732,203, and its golden-parachute table lists $4,928,325 for him.

Who decides

GoPro has two classes of stock. The proxy says Class B holders get ten votes per share and Class A holders get one. Its ownership table shows Woodman beneficially owning 25,036,070 Class B shares, or 95.34% of the class, and 55.94% of the total vote. The merger needs "the affirmative vote of the holders of a majority of the voting power of the outstanding shares."

The board listed among the deal's drawbacks that Woodman "is therefore able to determine the outcome of the vote on the adoption of the Merger Agreement," and that the merger is not conditioned on approval by a majority of the other shareholders.

The proxy also describes the deal's safeguards, and gaps:

• The sale process was run by a Strategic Review Committee of Mick Lopez, Susan Lyne and Woodman. It "was not granted authority to approve or authorize any Potential Transaction," and the full board kept that power.
• "Neither the Company CEO nor any other stockholder entered into a voting or support agreement in connection with the Merger."
• There is no "go-shop" period to look for a better offer after signing. The board counted that as a drawback, while saying "the extensive pre-signing process mitigated this concern."

The proxy says the board, before approving the deal, discussed the interests of insiders, "including the repayment of the secured loan made to the Company by entities affiliated with Mr. Woodman and the cash settlement of the related warrants." The board then voted unanimously. The proxy does not say whether Woodman recused himself from that vote, or from anything to do with the warrants.

The process, and the YouTuber

The proxy describes a broad search: from June 3, Houlihan contacted 103 potential counterparties, and 42 signed confidentiality agreements. By July 6, six had made preliminary, non-binding bids. A recapitalization offer from "Party D" implied about $1.67 a share after accounting for the warrants. Another bidder, "Party B," offered a floor of $300 million in equity value, but the committee concluded its added conditions "presented meaningfully greater execution risk." The eventual buyer's offer rose from an implied $0.82 a share in its Aug. 5 proposal, which GoPro calculated was really about $0.39 to $0.69 after the warrants and other adjustments, to $1.14 in cash.

Then the proxy says that on Aug. 20, a Schedule 13G "was filed by Mark Edward Fischbach, also known as and referenced herein as Markiplier, a well-known YouTuber." On Aug. 31, after a Bloomberg article about that filing, the stock "opened at $0.61 and closed at $0.8762 on trading volume of approximately 220 million shares, more than 25 times the prior trading day’s volume."

The committee then "concluded that it was important to finalize and announce a Potential Transaction, if one could be agreed on acceptable terms, before the Class A Common Stock could trade further on the basis of market speculation rather than the Company’s fundamental prospects." The merger agreement is dated Sept. 1. The filings do not suggest Fischbach did anything improper.

The restatement

GoPro's Oct. 16 8-K says the company found accounting errors "While preparing the proxy statement related to the transactions contemplated by the Agreement and Plan of Merger." The errors involved 2025 warrants issued to Mateo Financing and 2026 convertible debentures issued to YA II PN, Ltd. The Woodman-affiliated warrants are not on the 8-K's list.

The 8-K says the net loss for the third quarter of 2025 is now $27.4 million, up from $21.3 million as first reported. The full-year 2025 loss is now $92.6 million, down from $93.5 million. GoPro disclosed a material weakness: it "did not design and maintain effective controls to evaluate the accounting for and valuation of embedded features within financing arrangements." PwC, in the restated annual report, wrote: "Management and we previously concluded that the Company maintained effective internal control over financial reporting as of December 31, 2025."

The restatement also tripped GoPro's loan agreements. The 8-K says the errors "constitute a default or event of default" under its credit facilities, the debentures and the senior secured notes, including the notes held by Woodman's affiliates. It says GoPro "has requested and obtained waivers," but adds that it "cannot assure that it will obtain the remaining waivers on acceptable terms or at all." The restated second-quarter report says waivers came from the bank lenders, "the Buyers, as holders of the 2026 Notes," and YA II PN, and that "No fees or other consideration were paid in connection with the waivers."

GoPro's side

GoPro says its "management and Audit Committee have determined the misstatements were unintentional and were not the result of fraud or any other attempt to deceive," and, in an Oct. 19 release, that the restatement "involves non-cash accounting adjustments and does not affect the Company's previously reported revenue or operating cash flows." The board says the sale process "was reasonably designed to identify, and had identified, the transaction offering the highest value reasonably available to the Company’s stockholders."

The proxy also points to GoPro's debts. GoPro must repay its revolving credit line "in full by January 5, 2027," and a July fee letter described in a July 13 8-K required a refinancing, sale or similar transaction within 180 days of July 9. In the October release, Woodman said: "Filing the preliminary proxy is the next step toward closing, and we’re working closely with Starman to complete the remaining steps efficiently."

What the documents show, and what they don't

The documents show that GoPro's controlling shareholder sat on the committee that ran the sale. Trusts tied to him lent the company $20 million in July, on terms that pay cash for their warrants if GoPro is sold. The deal his votes alone can approve repays those notes and buys out those warrants for an amount the proxy estimates at $21.9 million. The board says it knew all of this and weighed it.

The documents do not show wrongdoing, and they do not say why anyone did what they did. The law firm Brodsky & Smith has announced that it is investigating potential claims against GoPro's board over the merger. That is an investigation notice, not a lawsuit.

Tags: mergers-acquisitions · sec · retail-consumer