Eastman Kodak Co. (NYSE: KODK) Shares plunged by as much as 43% on Monday after a $765 million loan to aid the company’s pivot into drug-ingredient manufacturing was put on hold pending an investigation.
The stock was temporarily halted after plunging as much as 43% earlier in the day. The share price later recovered grounds to close at $10.73, down 27.89% from the opening price of $14.88.
The $765 million loan from the US government to help make drug was put on hold, as regulators are reportedly looking into allegation of insider trading.
Senior Democratic lawmakers had asked the federal regulators to investigate securities transactions made by the company and its executives around the time it learned it could receive the government loan.
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“Recent allegations of wrongdoing raise serious concerns,” the US International Development Finance Corporation said in a tweet Friday afternoon. “We will not proceed any further unless these allegations are cleared.”
The DFC’s announcement came a few days after questions arose about heavy trading volume for Kodak’s stock, which soared as much as 2,757% following the initial July 29 announcement.
Investogist had reported on Wednesday, 29 July 2020 that Kodak Shares soared by as much as 2,189% in just 2 days after the company known for its photographic-films secured a loan from the US government to produce generic-drug ingredients in the U.S, in response to the coronavirus pandemic.
The rise in the price of Kodak shares generated a windfall for executives, Kodak executives including CEO Jim Continenza are also facing criticism for receiving stock options on July 27, a day before the loan announcement. The CEO was granted additional options of 1.75 million shares.
White House Press Secretary Kayleigh McEnany on Monday would not say whether President Trump will pull the plug on a recent deal with Kodak, but said he takes allegations of insider trading against the company “very seriously.” She added that the president has “strong faith in the process” and that the administration will not proceed until the allegations are cleared.
The U.S Securities and Exchange Commission is Investigating how the $765 million loan was announced. Local media in Rochester, N.Y., reported the news on July 27 before scrubbing their stories from the Internet after a Kodak representative requested they do so.
Kodak shares went from $2.62 to an intraday high of $60 at one point as it soared on the back of the loan announcement.
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