Kodak probed over background to new pharma venture

Jo Francis
Friday, August 7, 2020

Kodak is facing at least one probe into events around its new US government-backed pharma venture that caused its share price to soar last week.

Kodak: DFC loan "raises questions that must be answered"
Kodak: DFC loan "raises questions that must be answered"

At the end of last month the US International Development Finance Corporation (DFC) signed a letter of intent to lend Kodak $765m (£590m), on the direction of President Donald Trump.

However, Kodak’s share price jumped prior to the official announcement, apparently after a media advisory was issued to local news outlets in Rochester, where it has its headquarters.

Kodak executives were among the people who benefited from the share price rise.

Earlier this week, the Democrat-led House of Representatives in Washington also announced a probe, with the chairs of three separate committees penning a letter to Kodak executive chairman Jim Continenza that said: “DFC’s decision to award this loan to Kodak despite your company’s lack of pharmaceutical experience and the windfall gained by you and other company executives as a result of this loan raise questions that must be thoroughly examined.”

Continenza and board member Philippe Katz purchased additional Kodak shares in June, while Continenza was awarded 1.75m stock options the day before the mega-government deal was announced.

Kodak executives David Bullwinkle, Randy Vandagriff and general counsel Roger Byrd were also granted stock options on the same date.

The group’s share price soared by almost 1,500% and briefly reached a 52-week high of $60 after the funding was announced, resulting in an $83m gain on paper for Continenza in the space of a few days.

The House of Representatives has requested that documents and information related to the DFC loan and the Kodak share deals be provided by August 18, covering the period from 1 January 2020 to the present.

The SEC (Securities & Exchange Commission) has also reportedly opened an investigation, although this has not been officially confirmed.

Kodak’s share price has since settled back at $16.03.

In a statement, a Kodak spokesperson said: “While we unfortunately cannot comment on any specific government matters at this time, we intend to fully cooperate with any potential governmental inquiries.

“Kodak Pharmaceuticals does not at all diminish the critical importance of our current print business. Our print customers will continue to receive the products and support that they know and trust from Kodak. We remain 100% committed to print and will continue to invest in ground-breaking innovations to meet our customers’ needs.”

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