Eastman Kodak shares plunged in pre-market trading Monday after U.S. officials froze a $765 million loan to the group amid allegations of wrongdoing and a reported investigation by the Securities and Exchange Commission.
The U.S. International Development Finance Corp., known as the DFC, said it will not proceed with the loan, which was granted last month to the photographic equipment-maker to help it transition to producing pharmaceuticals for the U.S. government, until ‘serious’ allegations of wrongdoing were addressed.
“Recent allegations of wrongdoing raise serious concerns,” the DFC said over the weekend. “We will not proceed any further unless these allegations are cleared.”
Kodak shares were marked 42.2% lower in pre-market trading Monday to indicate an opening bell price of $8.60 each. The shares, which traded at $2.65 prior to the July 28 loan announcement, reached as high as $60 each in the days after the surprise agreement.
The surge prompted a second look at the loan details from the chair of the U.S. House Financial Services Committee, Maxine Waters, who also urged the Securities and Exchange Commission to probe details of stock options granted to Kodak executives in the days prior to the DFC loan.
“Our concerns regarding insider trading during the COVID-19 pandemic have only been heightened by our serious concerns arising from a series of securities transactions engaged in by Eastman Kodak Co, its executive officers and its board members,” the Committee said.
President Donald Trump echoed at least a portion of that concern, telling reporters in Washington that the White House would “do a little study” on the terms of the agreement, which senior trade adviser Peter Navarro described as “the beginning of American independence from our pharmaceutical dependence on foreign countries.”