WXXI AM News

Federal agency puts a halt on Kodak loan while probe continues

Aug 8, 2020

Credit Emily Hunt for WXXI News

The federal agency that announced on July 28 that it was signing a letter of intent to provide a $765 million loan to Eastman Kodak, so that the company could establish a pharmaceutical division to make ingredients for generic drugs is now apparently putting a hold on moving ahead with that financing.

Tweets from the U.S. International Development Finance Corporation said that, “Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.”

And in another tweet, the DFC said that, “We remain committed to working together with other government agencies to address critical shortfalls in America’s pharmaceutical supply chain.”

Showing approval for the halt in proceeding further with the loan right now, also on twitter, was White House adviser Peter Navarro, who was in Rochester when the deal was first announced.

He tweeted, “VERY disappointed last week’s great deal with Kodak tarnished by allegations. Absolutely RIGHT move by DFC! We must redouble efforts to bring our pharma manufacturing home!!”

When the deal was first announced, President Donald Trump and other administration officials hailed the agreement as a way of bringing more pharmaceutical manufacturing back to the U.S. to reduce reliance on foreign sources. Also, officials with the government and Kodak have said the new pharmaceutical division could create at least 300 jobs in Rochester.

Kodak stock skyrocketed with the announcement, but there was also heavy trading activity when word of a big deal leaked out, and Democratic members of Congress have called for an investigation into the timing of events, as well as stock-option grants issued to executives ahead of the loan announcement.

The Wall Street Journal reported that the SEC is looking at the circumstances surrounding the announcement of the federal loan by Kodak, but that the investigation is at an early stage and may not produce allegations of wrongdoing. Kodak issued a statement on Tuesday saying that it intends to fully cooperate with any potential inquiries. 

On Friday, Kodak announced it has appointed a special committee of independent members of its Board of Directors to look into recent activity surrounding the federal loan.

On Saturday, a spokesperson for Kodak declined comment on the recent tweets by the DFC and Navarro.

A spokesperson for the DFC said that agency was not issuing any additional statement beyond the tweets they put out early Friday evening.