DFC: Eastman Kodak Loan Stalled Until ‘Allegations Are Cleared’
A $765 million loan agreement between Eastman Kodak and the government to provide pharmaceutical ingredients has been put on hold due to questions about Kodak’s recent securities transactions.
Reuters reported that the transactions had sparked questions of a very serious nature from senior Democratic leaders, and the U.S. International Development Finance Corp. (DFC) said it “will not proceed any further unless these allegations are cleared.” And President Trump said the government would be looking into the circumstances of the loan.
The photographic equipment maker reached a deal July 28 with the DFC to help make pharmaceuticals at its U.S. factories, and was to be the recipient of a $765 million loan in order to begin that project.
Shares of the company soared 1000 percent upon the news of the deal last week, Reuters wrote. The boost was a big one for executives, some of whom had received options just the previous day.
The transactions, lawmakers said, seemed to be suspicious and might constitute insider trading.
Kodak has set up its own independent committee of directors from its board, Akin Gump Strauss Hauer & Feld LLP, to look into the matter, the company said in a statement.
It’s not the first time Kodak has been involved in the medical field — the company owned pharmaceutical firm Sterling Winthrop from 1988 to 1994, PYMNTS reported. Now, the company is slated to produce some ingredients in hydroxychloroquine, which has been said by some to work as a treatment for the coronavirus, along with other drugs.
The $765 million loan is to be repaid over a 25-year span. It was the first loan given by the DCF, and came from Trump’s order earlier in the year to spur more American production of things to fight the pandemic. Kodak CEO Jim Continenza said as much as 40 percent of the company’s sales could come from pharma.
However, PYMNTS ponders if the new momentum behind the company will last, or if it’s just a fluke.