What happened
Actions of Eastman Kodak (NYSE: KODK) It more than tripled Tuesday after news that the tech company would receive a $ 765 million loan from the United States government to produce vital coronavirus-related pharmaceutical components.
And that
Eastman Kodak will use the funds to launch Kodak Pharmaceuticals, a new division that will produce pharmaceutical ingredients deemed critical by the United States Department of Defense (DOD) and the Food and Drug Administration (FDA). The funds will be issued by the United States International Development Finance Corporation (DFC) under the direction of President Donald Trump under the Defense Production Act (DPA).
Eastman Kodak’s shares soared after receiving a revolutionary investment from the United States government. Image source: Getty Images.
The measure aims to strengthen the nation’s stock of drugs that are in short supply during the coronavirus pandemic, as well as reduce the country’s dependence on foreign manufacturers. “It is about securing our supply chains now and in the future,” said John Polowczyk, leader of the White House Supply Chain Task Force, in a press release.
Now what
The money will serve as a lifeline for Kodak, which has struggled to adapt to the move to digital photography. Once a titan of American industry, Kodak was forced to file for bankruptcy in 2012. He emerged from bankruptcy in late 2013 with a new focus on commercial printing, but his stock price would drop more than 85% before today. Even after today’s gains, Kodak shares have still fallen 60% since their re-entry into public markets.
The $ 765 million loan and supply agreement with the United States government is undoubtedly a game changer for Kodak, which had a market capitalization of just $ 115 million prior to today. With its market capitalization growing by more than $ 230 million in the news, investors expect this deal to be a major new driver of revenue and profit growth for the company.
