The meteoric rise, and then fall, of Eastman Kodak stock — and the recent profits scored by top executives there — is garnering more attention. House Democrats are now looking into a $765 million federal loan as well as trading activity by company executives before the loan was publicly announced.
The runup in stock prices was spurred by President Trump’s invocation of the Defense Production Act — and, specifically, the fact that Kodak would get the $765 million loan to enable it to start manufacturing some of the ingredients that find their way into generic drugs. Kodak, of course, has long been known for its camera and film business rather than pharmaceuticals.
According to a press release, Democrats in the U.S. House of Representatives have requested documents and information regarding the loan, which is funded by the U.S. International Development Finance Corp. (IDFC). They are also questioning Kodak’s lack of experience with the pharmaceutical industry.
The Democrats — Rep. James E. Clyburn, chairman of the Select Subcommittee on the Coronavirus Crisis; Rep. Maxine Waters, chairwoman of the Committee on Financial Services; and Rep. Carolyn B. Maloney, chairwoman of the Committee on Oversight and Reform — sent letters to the head of IDFC and to James Continenza, Kodak’s chairman.
The actions follow a probe into the loan by the U.S. Securities and Exchange Commission (SEC). Of particular interest to the SEC is how Kodak controlled the release of information about the loan, which was picked up and reported on July 27, the day before the official announcement, by TV stations in the company’s hometown of Rochester.
The day before the announcement, Kodak granted options on 1.75 million shares – worth roughly $16 million – to Continenza, The Wall Street Journal reported.
On July 29, shares were up more than 300 percent intraday, to more than $26 a share.
The Congress members said the Kodak loan “was the first announced” by the IDFC after a May 14 executive order authorizing it to make loans under the Defense Production Act in connection with the pandemic.