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August 29, 2024
A financial expert with a reputation for sniffing out bad investments is asking the U.S. Small Business Administration to investigate the $160 million bond arrangement between Gallatin County and Bridger Aerospace, the company founded by U.S. Senate candidate Tim Sheehy, who is challenging Democratic incumbent Jon Tester in one of the nation’s highest-profile Senate races.
Marc Cohodes is a short seller well known in the financial world for his short bets against companies making questionable business decisions, most notably the investment bank Lehman Brothers ahead of the 2008 mortgage crisis that took Lehman down. In 2023, Cohodes warned investors about the integrity of FTX before the cryptocurrency exchange collapsed for defrauding investors. He’s less known for living in Gallatin County.
This week, Cohodes and a handful of other residents wrote to the SBA inspector general asking that it investigate two things: the way Bridger Aerospace spent $160 million in bond money awarded through Gallatin County, and Bridger presenting itself to the federal government as a “socially and economically disadvantaged business” — a designation that could have given the Belgrade-based aerial firefighting business preference in securing government contracts.
“The bottom line is it’s going to go broke. And when Bridger goes bankrupt, shit really hits the fan,” Cohodes told Capitolized. “So, Gallatin County owes everyone an explanation to exactly what’s going on.”
The four-page letter quickly pivots from naming Bridger Aerospace in the second paragraph to Sheehy in the fourth, after which the former CEO turned candidate is identified throughout as the corporate decision maker.
Several of the letter’s cosigners have donated to Democratic campaigns. One, Billy McWilliams, is a leader in local Democratic Party politics.
Sheehy campaign spokesperson Jack O’Brien told Capitolized: “The authors of this letter have all made public statements and/or campaign donations supporting Jon Tester. It is clear Tester’s supporters wrote this letter with one goal: to hurt Tim’s campaign, tear down a Montana company, and help Jon Tester. Bridger Aerospace is a good company that protects public lands by fighting wildfires, and it is our hope that the authors of this letter cease their efforts to destroy a Montana business, put Montanans out of a job, and wipe out their retirement savings. Bridger Aerospace has had record quarterly revenue and continues to fight wildfires to defend Montanans in the face of smears from Jon Tester, Chuck Schumer, and their supporters.”
The campaign described Cohodes as a “low-life short seller who makes his money betting against American businesses.”
This isn’t the first time Bridger Aerospace’s $160 million bond, for which Gallatin County was the conduit, has made news. Montana Free Press first reported concerns about the bond in an April article about the financial health of the business, of which Sheehy was CEO until July. Gallatin County has emphasized that it has no liability should bond investors go unpaid.
“The Gallatin County Commission has received a number of these types of concerns and politically-motivated inquiries over the past year,” the commission said in a Thursday statement responding to the Cohodes letter. “We believe these concerns stem from a misunderstanding of conduit private activity bonds, which are a common tool of capitalization in the national bond market. To clarify, Gallatin County has no liability exposure related to Bridger Aerospace’s business operations.”
Cohodes, 64, describes himself as an investor who goes after frauds and shady companies. He is often sought out by the media to provide commentary about short bets. He thinks there’s a risk for Gallatin County if the industrial development bonds aren’t repaid because the reputation of the county was an assurance to people who invested in the bonds, Cohodes said.
Bridger has acknowledged both matters in federal filings. The company, which has significant debt, has acknowledged not meeting the terms of the bonds, which require Bridger to maintain $8 million in unrestricted cash on hand to assure payments are made, a situation unlikely to be corrected in the next 12 months, according to the company’s annual financial report issued in July.
The issue concerning how the bond money was spent stems from Bridger’s decision to redeem more than 6 million shares of Legacy Bridger Series preferred stock to early investors. The bond money was intended to finance a hangar expansion and additional aircraft, even as $134 million went to redeeming shares. In July, the company also acknowledged a mistake in its classification as a socially and economically disadvantaged business. Bridger indicated that the designation was unintentional. A disclosure concerning misstated earnings per share triggered a law firm’s solicitation of investors for a class action lawsuit alleging false pretenses.
—Tom Lutey
Gianforte Declines Debate
Republican Gov. Greg Gianforte has declined to debate Democratic challenger Ryan Busse, whom the governor’s campaign repeatedly called “unhinged” and lacking credibility.
The announcement, issued Aug. 27 by the Gianforte campaign, comes 45 days before absentee voting begins. The campaign cited several remarks by Busse that it found offensive, including instances in which the Democrat referred to Republicans as Nazis and fascists.
This would be the first general election in memory that the Montana governor’s race didn’t include a debate.
“If Gianforte is not held to account for dodging a legitimate debate, Montanans may never see a political debate again,” Busse campaign manager Aaron Murphy said in a press release. “Gianforte’s refusal to participate should also not result in Montana voters being denied an opportunity to hear from willing candidates who have the courage to answer tough questions from the press and from voters.”
Gianforte campaign manager Jake Eaton said it is unlikely that Gianforte sharing a stage with Busse would result in an exchange of ideas on public policy. Asked if refusing to debate Busse might have political consequences, Eaton referred to Republican polling he said suggested Gianforte has had an advantage of roughly 20 percentage points since before the primary election.
Busse criticized the incumbent’s decision in a press release: “Governor, for someone who’s infamously known for assaulting another man, then lying to police about it, we find it rich that you’re suddenly offended by tough language and accountability. Not debating me is proof you’re in political hot water, and you know it. Your harebrained excuses are whiney, wimpy, and almost as embarrassing as your failure as governor.”
Gianforte isn’t the first Montana incumbent to decline a debate. Others have eventually reconsidered.
—Tom Lutey
On Background
Earlier this month, MTFP’s Mara Silvers profiled the race between Gianforte and Busse, with a particular focus on the Democrat’s strategy to convert Republican voters.
In April, MTFP reporter Arren Kimbel-Sannit reported on Bridger Aerospace’s latest SEC filings indicating that the publicly traded company is deep in debt and at risk of failing to meet its financial obligations in the coming year.
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