Montana Free Press: How can voters “trust Sheehy with their tax dollars if he can’t keep his company in the black?”

Helena, MT, - Breaking new reporting from Montana Free Press revealed that Tim Sheehy’s company is “deeply in debt, hemorrhaging cash and at risk of failing to meet its financial obligations,” raising new questions about how Sheehy could be trusted with Montanans’ tax dollars if he is unable to keep his company afloat – and his motivation to run for a Senate seat where he would have the ability to steer millions in government contracts to his business. 

At a campaign stop last week, Sheehy told attendees, “I’m a business owner. If my business isn’t doing well, I don’t get paid,” but his campaign refused to respond to questions about whether he would continue to take a salary.

Bridger Aerospace gets 96% of its income from government contracts. If elected to the Senate, Sheehy would oversee that very funding. 

Read more below: 

Montana Free Press: U.S. Senate hopeful’s company reported losses of more than $77 million in 2023

April 9, 2024

Arren Kimbel-Sannit

- The annual report the publicly traded company filed with the U.S. Securities and Exchange Commission also shows that Bridger is deeply in debt, hemorrhaging cash and at risk of failing to meet its financial obligations in the coming year. 

- “The Company has suffered recurring losses from operations, operating cash flow deficits, debt covenant violations, and insufficient liquidity to fund its operations that raise substantial doubt about its ability to continue as a going concern,” Bridger’s auditor said in a note to stockholders and the board of directors.

- Or, as University of Montana accounting professor Terri Herron put it in an interview with Montana Free Press: “Management concluded that they may not be around in a year.”

- That’s in part because Bridger reported a net loss of $77.4 million in 2023, a hole more than $30 million deeper than the previous year, according to its annual filing.

- The company’s current assets total about $45 million — only about $23 million of which is in the form of unrestricted cash or cash equivalents — down from $107 million the year before.

- More material is the fact that Bridger is at risk of violating financial agreements enacted as a result of a $160 million municipal bond agreement with Gallatin County, which was used to finance hangar expansion and to purchase additional aircraft. 

- That bond, which brought the company’s long-term indebtedness to $204.6 million, came with a number of covenants, including that Bridger maintain a debt service coverage ratio — a figure that represents a firm’s ability to pay debt obligations with cash — above a certain level and that it have a minimum liquidity of at least $8 million in unrestricted cash. 

- The company’s management reported in the annual filing that Bridger is not in compliance with the debt service ratio covenant and likely won’t be at any point in the next 12 months. And while Bridger has more than $8 million on hand, management predicted that won’t be the case moving forward, in part because of forthcoming interest payments of $18.4 million. 

- Failure to comply with the bond covenants may mean the company will be required to ask a consultant to review its operations, according to the annual filing. In some instances, it could mean the company would default on the loan or have to pay it back ahead of schedule. 

- Somewhere between a fifth and a quarter of publicly traded companies get a “going concern” report as Bridger did, Herron said. Of particular note in Bridger’s report, she said, is the phrase “substantial doubt about its ability to continue as a going concern.” According to federal accounting standards, that means that it’s more likely than not that the entity won’t be able to meet its financial obligations in the coming year.

- The company said in the report that it began cutting costs in November 2023. By the end of 2023, the company reported a staff of 148, down from 166 the year before.

- The filing continued: “The uncertainty regarding the company’s ability to diligently prosecute the remediation plan to completion and the potential impact on the bonds maturity … raises substantial doubt about our ability to continue as a going concern as of the date our financial statements are issued.” 

- Incidentally, the fact Sheehy is campaigning for the Senate creates some risk for Bridger, the report notes, including the possibility of bad publicity.

- A spokesperson for Sheehy’s campaign referred a number of questions — including why voters should trust Sheehy with their tax dollars if he can’t keep his company in the black and whether he would continue to take a salary — to Bridger. 

- “The quickest way to balance the budget is if you’re in Congress and you don’t have a balanced budget passed by a certain date, you don’t get a paycheck,” Sheehy told the audience at a campaign stop in Frenchtown last month, according to NBC Montana. “I’m a business owner. If my business isn’t doing well, I don’t get paid. My employees do, but I don’t.”

- Outside of its immediate financial situation, the company also reported that it identified multiple “material weaknesses” in its internal financial reports. These weaknesses can cast doubt on the validity of a company’s financial statements, Herron said.