The federal government is halting a $765 million loan to Eastman Kodak Company KODK for its generic drug-making foray until the company is cleared of insider trading allegations.
"On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns," the United States International Development Finance Corporation said in a statement late Friday.
"We will not proceed any further unless these allegations are cleared."
The independent federal agency had signed a letter of intent with the former photography giant for the loan, which was to be used to make drugs in short supply in the country.
Why It Matters
Kodak is reportedly facing an investigation from the U.S. Securities and Exchange Commission related to its disclosure of the loan on July 27, which caused the company’s shares to surge 25% the same day.
The commission is also said to be looking into stock options granted to Kodak executives, including the company’s CEO Jim Continenza, according to the Wall Street Journal.
The chief executive was granted options on 1.75 million shares, a day before the loan was disclosed, a quarter of which were vested on the day the loan was granted.
Kodak announced an internal investigation to review matters related to the controversial government deal on Friday.
Kodak shares fell almost 7.6% to $14.88 on Friday and declined another 0.54% in the after-hours session.
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