Allegations of Insider Trading Cloud Future of Kodak Loan Agreement with US Government

WASHINGTON, KOMPAS.com – The $765 million Kodak loan agreement reached with the US government to produce pharmaceutical ingredients has been put on hold.

The temporary halt in the deal was due to “recent allegations of wrongdoing”, according to the US International Development Finance Corp (DFC).

Earlier this week, senior Democratic lawmakers requested that federal regulators investigate securities transactions made by Eastman Kodak Co. and its executives around the time it learned it could receive the government loan.

"Recent allegations of wrongdoing raise serious concerns," DFC said late on Friday in a tweet.

Read also: Kodak Flying High after Striking Manufacturing Deal with US Government

"We will not proceed any further unless these allegations are cleared," the DFC said. It was referring to a letter of interest it signed on July 28 with Kodak.

President Donald Trump on Tuesday said the government would investigate the circumstances surrounding the announcement of the loan, which will help the photographic equipment maker shift into making pharmaceuticals at its US factories.

Kodak shares surged more than 1,000 percent last week after the loan was announced, generating a windfall for executives, some of whom had received options one day earlier.

Lawmakers said they had "serious concerns" about the transactions and asked the Securities and Exchange Commission to investigate the circumstances surrounding the matter.

They cited growing concerns about insider trading.

The company said it had appointed a special committee of independent directors of its board to conduct an internal review.

"The internal review will be conducted for the Committee by Akin Gump Strauss Hauer & Feld LLP," Eastman Kodak said in a statement.

(Writer: Kanishka Singh | Editor: Sonya Hepinstall) 

Source: https://www.reuters.com/article/us-usa-eastman-kodak-deals/eastman-kodaks-765-million-u-s-loan-agreement-on-hold-after-recent-allegations-idUSKCN2540XV