The U.S. International Development Finance Corp (DFC) says it is holding up a $765 million loan agreement it signed on July 28, 2020 with Eastman Kodak Company (NYSE: KODK) for its generic drug-making foray until the former photographic equipment maker is cleared of insider trading allegations.
Last week, senior Democratic lawmakers urged the U.S. Securities and Exchange Commission to investigate whether potential insider trading laws had been broken, citing the timing and scope of the trades made by the company and its executives before the deal’s public announcement.
Kodak shares, which jumped 25% the day before (July 27) the Trump administration’s $765 million loan was made public, skyrocketed by more than 2,000% in the two days after the loan was announced, generating massive profits for Kodak’s executives, some of whom, including the company’s CEO Jim Continenza, had received stock options one day before the loan’s announcement.
“Recent allegations of wrongdoing raise serious concerns,” DFC said late Friday in a tweet.
“We will not proceed any further unless these allegations are cleared,” the DFC said, referring to a “Letter of Interest” it signed with Kodak.
In response to the DFC, Kodak announced Friday the formation of a special committee which would review recent activity by the company and related parties in connection with the controversial loan.
“The internal review will be conducted for the Committee by Akin Gump Strauss Hauer & Feld LLP,” Kodak said in a statement.
Kodak shares nosedived 38.39% to $9.18 at 8:03 a.m. in New York, up 220% year-to-date and 602% year-over-year.