Kodak's $765 Million Federal Loan Held Up Over 'Serious Concerns'
A massive $765 million federal government loan to help Eastman Kodak Co. retool to speed production of ingredients for COVID-19 drugs — including controversial hydroxychloroquine — has been held up over “serious concerns” following allegations of “wrongdoing,” a federal agency announced.
“Recent allegations of wrongdoing raise serious concerns,” the U.S. International Development Finance Corporation said in a tweet late Friday of the company that once dominated the camera and film industry. “We will not proceed any further unless these allegations are cleared.”
The Securities and Exchange Commission is already investigating the deal. Kodak’s board also said Friday that it’s launching a review of the loan, Bloomberg reported.
On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.
— DFCgov (@DFCgov) August 7, 2020
The Wall Street Journal first reported Tuesday that the SEC was investigating Kodak stock purchases by company board members and stock options granted to them before the deal was announced July 28. Company shares jumped more than 2,000% in the days after the deal was reported, according to Bloomberg.
Sen. Elizabeth Warren (D-Mass.) called for an SEC investigation into potential insider trading concerning options the day before the deal was announced. In her letter to SEC Chair Jay Clayton, she also asked the commission to examine purchases in June of “substantial amounts of company stock” by Kodak CEO James Continenza and another board member “at a time when Kodak and the Trump administration were negotiating the deal in secret.”
The development bank loan was the first of its kind under the Defense Production Act in collaboration with the U.S. Department of Defense. When President Donald Trump announced the massive loan, he called the arrangement “one of the most...
