Recent accusations of wrongdoing may have caused Eastman Kodak to miss out on a $765 million deal with the U.S. government to produce vaccine components to help in the fight against the ongoing pandemic, the U.S. International Development Finance Corp disclosed.
The IDFC tweeted Friday night that funding would not be released as federal authorities look into how Kodak's share price surged from $2.62 on July 27, when the loan deal was announced, to as high as $60 just 48 hours following the news.
As of Friday in after-hours trading, its share price had fallen 7.64 percent to $14.88, following reports of the preliminary deal.
The loan agreement has been put on hold, said the IDFC, which just a few weeks ago had declared that the money would be released for Kodak's pharmaceutical program.
The loan was to help Kodak pay for production requirements and last-minute changes in the manufacture of ingredients whose supply has become very limited in the U.S.
According to the IDFC, allegations of unethical behavior or malpractice are a serious matter. It said its agreement with Kodak will be put on hold unless regulators dismiss the claims. The IDFC alluded to a letter of interest that it signed with Kodak on July 28.
The board of directors of Kodak, which declined to issue any comments on Saturday, disclosed on Friday that it was conducting an evaluation of the loan agreement as the Securities and Exchange Commission and Congress look into it as well.
The Rochester, New York-based company - once a major manufacturer of camera and film devices - was focused on setting up Kodak Pharmaceuticals as its new business unit to produce ingredients that chief executive officer Jim Continenza said have been in short supply nationwide. In an interview with the Journal, he said he expects the group's pharmaceuticals arm to comprise almost half of Kodak's business.
Meanwhile, reports said Massachusetts Senator Elizabeth Warren sent a letter asking the SEC to determine whether Kodak had violated policies on insider trading. On Tuesday, United States President Donald Trump said an investigation would be carried out to look into events associated with the disclosure of the loan.
