Kodak crashes as $765M loan for drug industry pivot put on hold

Shares fell as much as 43%

Eastman Kodak Co. shares plunged by as much as 43% on Monday after a $765 million loan to aid the company’s pivot into drug-ingredient manufacturing was put on hold pending an investigation.

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KODKEASTMAN KODAK CO.9.32+0.55+6.27%

“Recent allegations of wrongdoing raise serious concerns,” the U.S. International Finance Corp., which invests in development and advancing American foreign policy, tweeted on Friday evening. “We will not proceed any further unless these allegations are cleared.”

The White House said on Monday the loan to Kodak will not proceed until the company is cleared of wrongdoing.

The U.S. Securities and Exchange Commission is investigating how the $765 million loan was announced. Local media in Rochester, N.Y., reported the news on July 27 before scrubbing their stories from the Internet after a Kodak representative requested they do so.

Regulatory filings show executives were granted stock options in late June and that CEO Jim Continenza was granted additional options for 1.75 million shares.

Kodak’s foray into the pharmaceutical industry, which was part of President Trump’s plan to use the Defense Production Act to bring the manufacturing of critical drug ingredients back to the U.S., sent shares soaring by as much as 29,000% in the two trading days following the announcement, from $2.62 to an intraday high of $60.

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Shares traded below $9 early Monday before being halted after a small bounce.