Eastman Kodak’s recent fairy tale rise came to a halt after allegations of insider trading surfaced. Recently the company secured a $765 million loan from US government to make drug ingredients. However, allegations of wrongdoing was reinforced after regulators found out that Kodak executives including CEO Jim Continenza received stock options on July 27, a day before the loan announcement.
Eastman Kodak stock has plummeted 27% in premarket trading Monday after the Development Finance Corporation, a U.S. government agency, said it would delay the approval process for a loan to build out a new pharmaceutical ingredient business, pending an investigation.
The loan news caused Kodak stock to spike more than 1,100%. Now the stock is down almost 90% from its 52-week high. But shares are still up almost 140% year to date—even including Monday’s premarket declines.
Kodak planned to use the $765 million to launch Kodak Pharmaceuticals, a new business unit which will manufacture generic active pharmaceutical ingredients to fight Coronavirus. According to the company the new venture would create 350 direct and approximately 1,200 indirect new jobs.
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