Federal agency puts a halt on Kodak loan while probe continues

Joanna Estrada
August 10, 2020

Shares of Eastman Kodak Co KODK.N fell about 40% on Monday and were on track for their worst single-day decline after the US government blocked a $765 million loan to the company, which was going to make drug ingredients for use in possible COVID-19 vaccines, because of "alleged wrongdoing" by executives.

The U.S. International Development Finance Corporation says the deal that was announced last week, which would provide a loan to Kodak to enter the drug manufacturing business will not move forward.

On Saturday, a spokesperson for Kodak declined comment on the recent tweets by the DFC and Navarro.

"The internal review will be conducted for the Committee by Akin Gump Strauss Hauer & Feld LLP", Eastman Kodak said in a statement. The regulator is also looking into stock awards granted by Kodak. The option grants instantly became profitable, at least on paper, after Kodak's loan became public.

The loan, meant to support Kodak, a technology and pharmaceutical company, in producing drug ingredients, was announced on July 28.

Peter Navarro, President Trump's trade adviser who was involved in the plans, has recently distanced himself from the company.

The Wall Street Journal is reporting the SEC has opened a probe.

On July 28, the company announced it was getting a $765 million loan from the DFC to aid it in producing drug ingredients.

The development bank loan was the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense. Kodak shares have surged to as high as $33.20 from $2.10 before news of the loan leaked.

The Securities Exchange Commission announced last week that it was investigating the firm on its extraordinary stock growth and whether any insider trading took place, as shares traded up 26% in pre-market before the announcement was made. "My administration has reached a historic agreement with a great American company".

Other reports by Click Lancashire

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