TOPLINE
Shares of Eastman Kodak, which initially swore at an announcement that the government would provide a $ 765 million loan to help shift its efforts in the drug industry, thanked on Monday afternoon for news that the deal would are held as regulators look to accusations of wrongdoing.
Kodak’s $ 765 million loan from the government has been put on hold and shares are down nearly 30%.
KEY FACTS
Eastman Kodak’s share fell more than 40% Monday morning after a federal agency said in a tweet that it withheld the $ 765 million loan.
“Recent allegations of crime have raised serious concerns. We will not proceed unless these allegations are cleared, “the US International Development Finance Corporation (DFC) said in a recent statement. statement about the deal.
Kodak stock jumped 25% a day before the loan was announced, drawing attention to the Securities and Exchange Commission (SEC) which is now reviewing the terms of the deal.
The stock was also so volatile the day after the announcement, with more than 100,000 retail investors adding to its portfolios in Robinhood – that it was stopped 20 times in one day.
Kodak shares have recovered since the beginning of the morning and have now fallen by almost 30%; shares have risen 270% so far this year.
Key background
The $ 765 million loan granted to Kodak was the first of its kind under the Defense Production Act to help the company, which has historically focused on photography, turn to drug production. The company said it would use the loan to expand existing facilities and launch a new Kodak Pharmaceuticals arm that would focus on making “generic, active pharmaceutical ingredients,” as Trump described in announcing the deal. Trump later retracted his remarks, however, adding that he was “not involved” in the loan.
What to see
Kodak published news about the loan to reporters in Rochester, New York on July 27, a day before Trump publicly announced the deal. Several stores had picked up the story before Kodak then asked them to delete it. The company’s internal communications team reported “did not intend the news to be published,” according to a Kodak spokesman. SEC filings show that on June 23, Kodak CEO and chairman James Continenza bought roughly 46,700 additional shares in the company. A day before the federal loan was announced, Kodak gave him options for an additional 1.75 million shares, nearly 29% of which he immediately secured. However, there have been no indications from regulators that Continenza’s acquisitions are at the center of research.
Tangent
Kodak said on Friday that it has launched an internal investigation and will cooperate with all questions from federal agencies. In an open letter to the SEC, Senator Elizabeth Warren (D-Mass.) Called on the agency to review the spike in the trade that occurred before the announcement, raising concerns about “insider trading” or “unauthorized disclosure. of material, non-public information. ”The House Financial Services Commission again called for an investigation into the company because of” growing concerns about insider trading. ”
.
