With a single after-hours tweet on Friday, the federal agency working with Eastman Kodak Co. on a $765 million pharmaceutical deal appeared to put the whole project on hold.
“On July 28, we signed a Letter of Interest with Eastman Kodak. Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared,” the U.S. International Development Finance Corp. wrote in the tweet posted at 5:49 p.m. Friday.
A previously announced SEC and congressional inquiry was anticipated to slow, if not stall the deal.
The tweet raises many questions, from whether the agency is halting ongoing due diligence on Kodak’s loan application or just not proceeding with approvals, to whether the agency will wait on the SEC and congressional probes or if this is what triggered Kodak to announce a special review earlier in the day, and if that will suffice.
The letter referenced in the tweet made no commitment beyond proceeding with the legal, environmental and credit due diligence on the project. That was ongoing.
A Kodak spokeswoman declined comment on Saturday. The DFC did not immediately respond to messages.
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The tweet’s strong language of alleged wrongdoing and “serious concern” is notable. The questions raised so far involve early release of the pending announcement, shared by the White House with local media resulting in online stories and an early uptick in trading of Kodak stock. And Kodak leadership being issued stock options the day before the announcement, and buying stock while negotiating the loan with federal officials.
Kodak has said that all were routine.
The stock options were the culmination of a year-long compensation commitment that required internal committee approval. CEO Jim Continenza’s purchase of 46,737 shares in late June is not convertible to common stock until he leaves the company and was, a spokeswoman said, “a continuation of (his) ongoing, regular investments in Kodak and are in full compliance with regulatory guidelines for investment activity. Since joining Kodak as executive chairman in February 2019, Mr. Continenza has purchased 650,000 shares of Kodak stock.”
Earlier this week, President Donald Trump said the administration would look into questions surrounding the deal and promised a quick resolution.
“I wasn’t involved in the deal,” he told reporters. “The concept of the deal is good. But I’ll let you know, we’ll do a little study on that. We’ll find out. If there is any problem we’ll let you know very quickly. But I wasn’t involved in it.”
That sentiment seemed to be echoed in a tweet by Trump trade adviser Peter Navarro.
“VERY disappointed last week’s great deal with Kodak tarnished by allegations,” Navarro tweeted Friday evening. “Absolutely RIGHT move by DFC! We must redouble efforts to bring our pharma manufacturing home!!”
Kodak stock has been on a roller coaster the past two weeks, rising from a roughly $2 a share, where it has been steady for weeks, to a peak of $60 after the announcement, to closing Friday at $14.88. The company employs 1,300 in the Rochester area.
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