I’m having a hard time believing that US Senate candidate Tim Sheehy is a “highly successful businessman,” as he’s characterized in the press. Any historical common stock price chart will show that on the day Tim’s business, Bridger Aerospace (Bridger), shares were first offered to the public (January 25, 2023), the worth of the business (share price times number of shares) in the stock market was $890 million, and today, the company is worth $221 million. If that sounds like success to you, I have a bridge in Brooklyn to sell you.
Burning through Cash
One problem is that the business Tim manages keeps losing money, burning (pun intended) through its cash. Even before Bridger went public, it was losing lots of money annually. In 2021, the business lost $6 million. In 2022, it lost another $42 million. In 2023 (a year that Tim pointed out had “the shortest North American wildfire season in the past 20 years,”), the business appears to have lost even more than the $46 million it lost in the first nine months of 2023 (because annual revenue did not increase much since then, but expenses, like salaries and interest, continued to be paid). Bridger’s public stockholders (probably not a happy bunch) will find out the true extent of the 2023 loss in March.
Deeply in Debt
Another problem is that Bridger is deeply in debt. At the end of 2023, the business owed about $207 million to its lenders, which includes the $160 million in municipal (industrial revenue) bonds the business obtained through Gallatin County. During the first nine months of 2023, Bridger paid about $17 million in interest on its debt.
No wonder that, at the end of 2023, Bridger’s cash reserve of about $38 million was apparently not enough to address the business’s near-term cash demands. So, on February 6, 2024, Tim’s business informed the SEC in a prospectus that it planned to issue and offer to sell $22 million of the $200 million of new common shares it had earlier warned shareholders that it might sell. These new shares will dilute (reduce) the value of each of Bridger’s common stock shares. How much you ask?
Dilution of Stock Value
According to the prospectus, even before the new shares are sold, if the business failed and all its tangible assets (like aircraft and hangars) were sold at their book (depreciated) value, the sales proceeds would not be enough to pay off its business liabilities (like its debt) and redeem its Series A preferred stock shares, much less produce enough money to pay anything to its existing common stock holders. In the example in the prospectus, if the new shares were sold at a recent price of $5.40 per share, investment in each new share would cause “an immediate dilution net deficit of $11.37 per share to new investors.” Thus, new stock holders would have paid $11.37 more per share than each of their shares would be worth on liquidation at book value of the business’s tangible assets.
Yet Another Prospectus
In another prospectus that Bridger recently filed with the SEC, Tim’s business warned potential investors of the proposed resale by “selling stockholders” of “up to an aggregate of 8,825,729 shares of [Bridger] common stock” associated with Bridger’s acquisition of the wildfire situation awareness software company Ignis Technologies, Inc. Bridger will not receive any of the proceeds of the resale of its stock. As of January 25, 2024, there were outstanding 48,634,591 shares of Bridger’s common stock, of which 18% are owned by the selling stockholders. Hopefully, they will not all rush for the exit at once.
Mother Nature Always—Always—Bats Last
It’s amazing that while Tim’s business thoroughly discloses to potential new investors that climate change is going to generate new revenue, Bridger’s managers (including Tim) are not capable of preparing for the wild swings in weather that are a defining aspect of that same future. Has Tim forgotten the military adage “no plan survives contact with the enemy,” in this case, climate change? I like the way our current senior US Senator, Jon Tester, described the reality of climate change: “I am a farmer, and that means I’m beholden to science. I also know that Mother Nature always—always—bats last.”
Designed by Ultra-rich Republicans to Enrich Sheehy
At this point, it appears that the difficult-to-understand financial structure of Tim’s business was designed by ultra-rich MAGA Republicans to transfer money from the pockets of US taxpayers (via the Department of the Interior) into the pockets of Bridger’s inexperienced and overpaid directors and managers (like Tim) during the good years when the planet is burning and our Big Skies are choked with smoke. In the bad years when our skies are clear, money is transferred from the pockets of unsophisticated Wall Street stock buyers (who do not appear to understand the complex structure laid out in SEC filings) into those same directors’ and managers’ pockets. It should be no surprise that over half of the wealthy members of Bridger’s board and management team come from the oil and gas and the real estate development industries that are driving climate change and benefit from the Trump tax cut.
Sheehy Surrenders
While I’m sure aerial firefighting can be exciting, a lot of work lies ahead for Tim in making the business profitable, to continue to attract new investors and grow Bridger’s stock price. Is Tim giving up on his duty to Bridger’s shareholders (and employees) as the business feverously burns cash? If Tim becomes Montana’s junior senator, would he similarly surrender when the going got tough?