Kodak’s stock soars 80% after probe reportedly finds no wrongdoing in government loan
Kodak’s stock rocketed about 80% higher in early trading Monday after the US government reportedly found no wrongdoing in Kodak’s now-halted $765 million loan to help the company produce pharmaceutical ingredients.
US government regulators reportedly have been investigating why Kodak announced the loan on July 27, the day prior to the official announcement — the same day some executives, including Jim Continenza, Kodak’s executive chairman and CEO, received stock options.
Kodak, in a statement to CNN Business in August, said it didn’t intend to make those details public until July 28. The stock soared nearly 3,000% in the days following the loan announcement and has since fallen back to earth.
But the inspector general of the US International Development Finance Corp, which brokered the deal, found no evidence that “employees of the agency had any conflicts of interest in the plans,” according to the Wall Street Journal. The inspector general’s report also found no wrongdoing in the government’s process of administering the loan, the newspaper reported.
The agency or Kodak didn’t immediately return CNN Business’ request for comment.
Kodak, the camera equipment manufacturer, attracted attention — and criticism — for the first-of-its-kind loan during the summer. It received a Defense Production Act loan from the government as part of the effort to reduce dependence on foreign drug makers for Covid-19.
The loan, however, remains on an indefinite hold pending an investigation from the Securities and Exchange Commission and other questions from lawmakers.
A report released in September also found no wrongdoing on behalf of government employees. Although the review found no signs of Kodak breaking the law, it did find the company mishandled stock options granted to its CEO in the days leading up to the loan deal being signed.
The review by the law firm Akin Gump Strauss Hauer & Feld concluded insider-trading laws were not violated, noting Kodak executives were informed by the general counsel that the application process for the loan was “at a highly uncertain stage.”
“Kodak is committed to the highest levels of governance and transparency, and it is clear from the review’s findings that we need to take action to strengthen our practices, policies, and procedures,” Kodak said in a previous statement.
Kodak traded around $33 per share following the July announcement, but has fallen to $7.53 per share as of Friday’s closing.
