Eastman Kodak (KODK) shares soared 34.62% to $8.05 in premarket trading Tuesday after hedge fund D.E. Shaw purchased a 5.2% stake in the company.
D.E. Shaw has bought 3.94 million shares of Kodak stock, according to a filing with the Securities and Exchange Commission.
The company, which now makes print and advanced materials and chemicals, received a letter of interest in July from the U.S. government, putting Kodak in line to receive a $765 million loan to boost production of a variety of pharmaceuticals.
But the loan was frozen amid allegations of wrongdoing and a reported investigation by the SEC.
The U.S. International Development Finance Corp., known as the DFC, said it wouldn’t proceed with the loan, which was granted to Kodak 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. “We will not proceed any further unless these allegations are cleared.”
Kodak shares jumped to as high as $60 following the announcement of the loan from $2.65 prior to the July 28 announcement.
The surge in the stock 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 SEC to probe details of stock options granted to Kodak executives in the days prior to the DFC loan.
“The fiasco surrounding the decision to offer, then revoke, the Kodak loan also raises larger questions about corruption, nepotism, and mismanagement in the Trump administration’s response to Covid-19,” she wrote in a letter to Michael Horowitz, acting chairman of the Pandemic Response Accountability Committee.