Kodak Stock collapses as government loan approval is suspended


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Daniel Acker / Bloomberg


Investors in the former photography giant


Eastman Kodak
endured unreal extremes in the stock markets in recent weeks. Now a government tweet sent out on Friday night means the wild trade will continue.

The American International Development Finance Corporation, or DFC, tweeted that a loan owed to


Kodak
(ticker: KODK) seems to be on hold at the moment.

Kodak shares fell 29% to $ 10.52 a share on Monday morning in the wake of the DFC bombshell.

The “letter of interest” in the tweet refers to a $ 765 million loan that Kodak will use to start a new business segment producing pharmaceutical ingredients.

Kodak is not in the drugs business, and the surprise move sent Kodak shares up to 1.167% in two days from July 28. Shares briefly touched $ 60, before falling back to $ 14.88 at Friday’s close, down more than 75% from their 52- week high set for July 29.

Investors, after the initial wave of euphoria, had to decide how to value the new pharmaceutical business. The thinking process has taken a bit of air on stocks. Additionally, a stock pop on July 27, before the lending decision was officially disclosed, caught the attention of the Securities and Exchange Commission and government officials. Now, investors must decide what the in-depth review and DFC’s tweet will mean for the final loan decision.

The review also led Kodak to form a board level committee review the information disclosure process. News of the new committee appears to have leaked just before the DFC tweet.

The DFC said in a subsequent tweet that the agency remains “committed to working with other government agencies to address critical gaps in the US pharmaceutical supply chain.”

Many active pharmaceutical ingredients, or APIs, are manufactured overseas.

Kodak declined to comment on the DFC tweet. DFC staff were not immediately available for comment.

The mandate of the DFC was recently extended– after President Trump invoked the Defense Production Act in March – to relocate production of strategic assets, such as APIs.

The original letter of interest stated that Kodak had successfully passed the initial DFC screening. The process to complete the granting of the loan is not entirely clear and now regardless of the steps taken the initial selection appears to be on hold.

At over $ 10 a share, Kodak stock is still – incredibly – up nearly 100% year-to-date, far better than comparable returns in the


S&P 500

Where


Dow Jones Industrial Average

on the same staff.

Write to Al Root at [email protected]

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