Tim Sheehy, a Republican Senate candidate, is facing a precarious situation as he leads Bridger Aerospace, a company specializing in aerial firefighting.
Over the past five and a half years, Sheehy has overseen losses totaling $180 million, raising concerns about the company's viability just as he campaigns for a Senate seat. With the U.S. fire season nearing its end, the upcoming financial results will be critical in determining whether Bridger can sustain operations until the next season, potentially impacting Sheehy's political future.
Bridger Aerospace has been at the center of Sheehy's campaign, touted as a "job creator" and a rare publicly listed company in Montana. However, the company has faced significant financial challenges, including violations of debt covenants and reliance on stock sales to meet cash reserve requirements. Its auditors have expressed "substantial doubt" regarding Bridger's ability to continue as a going concern, a stark contrast to Sheehy's portrayal of the company as a success story.
In the lead-up to Sheehy's Senate bid, Bridger Aerospace engaged in various financial maneuvers, including selling and leasing aircraft to the company itself, generating an annual income of $1.7 million. The valuation of these 15-year-old planes was reported to be 60% above industry estimates, attributed to specialized avionics equipment. The company also saw significant investment from Blackstone, which injected $105 million between 2018 and 2020, acquiring a quarter of the company and two board seats.
Despite these investments, Bridger's financial health has deteriorated. In 2022, the company raised $460 million, primarily to cash out Blackstone's preference shares, allowing the private equity firm to nearly double its investment. However, Bridger ended the year with a $42 million loss and a net debt of $178 million. The merger with a SPAC in January 2023 did not provide fresh capital, as shareholders voted to withdraw their funds while approving the deal.
Bridger's leadership has also faced scrutiny, with significant resignations from its board, including the head of the audit committee and a representative from Blackstone. The company’s financial struggles were further highlighted when it reported a $30 million loss in the first half of 2024, with only $8.6 million in cash against $25 million in short-term liabilities. New CEO Sam Davis expressed optimism about sustaining operations through the active fire season, but the upcoming financial results will be pivotal in assessing the company's future.
The recent acquisition of Ignis Technologies for $12 million raised eyebrows, particularly as it was revealed that Ignis had been operating from Bridger's basement for nine months prior to the purchase. This lack of transparency has added to the concerns surrounding Bridger's governance and operational integrity.
As Sheehy campaigns for a Senate seat, he has positioned Bridger as a cornerstone of his platform, emphasizing its role in job creation and economic development in Montana. However, his opponent, three-term Democratic incumbent Jon Tester, has criticized Sheehy for the company's financial mismanagement, suggesting that his political aspirations are jeopardizing the business's future. Republican communications director Mike Berg has countered these claims, attributing Bridger's woes to Tester’s alleged attempts to undermine Sheehy’s business.
Sheehy's personal history as a Navy veteran and entrepreneur has been a focal point of his campaign, but it has not been without controversy. Allegations regarding his past, including discrepancies about a bullet wound and accusations of contract manipulation, have surfaced, potentially impacting voter perception. As the election approaches, the interplay between Sheehy's business dealings and his political ambitions will be closely scrutinized.
Bridger Aerospace's market performance has been tumultuous, with its valuation plummeting from a high of $1 billion at its public debut to approximately $130 million. The company operates a fleet of aircraft designed for firefighting, typically contracted by the U.S. Fire Service. However, financial projections made in its 2022 bond prospectus have proven overly optimistic, with revenues consistently falling short of expectations.
Despite the challenges, a spokesperson for Bridger maintains that the company's financial position is strong and that it continues to meet its debt obligations. The firm has reported record financial performance and contract awards in 2023, suggesting a potential turnaround.