Shares of Eastman Kodak (KODK) – Get Report surged more than 75% in trading on Monday after federal regulators reportedly found no wrongdoing in the process which created a loan to the company to produce ingredients made in drugs.
Citing a copy of the assessment that it said it reviewed, The Wall Street Journal reported that the inspector general of the U.S. International Development Finance Corp., which brokered the $765 million loan deal, said he found no evidence that employees of the agency had any conflicts of interest in the plans, and found no misconduct on the part of the agency’s officials.
Specifically, the Journal said the inspector general found no evidence that employees of the agency had any conflicts of interest in the plans, nor was there “any evidence of misconduct on the part of DFC officials.”
Kodak shares surged almost tenfold in July after the Rochester, New York-based company disclosed that it received a $765 million loan to manufacture Covid-19 drug materials as part of a government program.
Kodak, which has morphed from making now-obsolete film and chemicals for picture taking and developing into various materials and chemicals used for different kinds of products including drugs, received the loan in July under the Defense Production Act as a way to curb U.S. dependence on drugs made overseas.
Kodak stock surged in July after the company announced the loan, which it said it would use to make ingredients for generic drugs, including the anti-malarial drug hydroxychloroquine that President Trump and others took as treatment for Covid-19, and then fell dramatically in August after the government withdrew it and the Securities and Exchange Commission launched its own insider trading investigation.
Monday’s findings back up similar conclusions from a law firm hired by Kodak following allegations, which concluded this past September that the chemicals company mishandled an options grant to its CEO Jim Continenza, but didn’t break the law.
Law firm Akin Gump Strauss Hauer & Feld said in September that while Kodak’s general counsel didn’t properly inform the board about the potential pitfalls of the government loan, it otherwise did nothing wrong.
Shares of Kodak were up 57% at $11.84 in trading on Monday.