Eastman Kodak Company (NYSE: KODK) is under investigation by the United States Securities and Exchange Commission surrounding the announcement of a $765 million federal loan for its foray into pharmaceuticals last month, the Wall Street Journal reported Tuesday.
The SEC investigation, still at an early stage, revolves around the disclosure of the loan on July 27 by Kodak, which caused the company’s share price to spike 25% the same day, according to the Journal’s sources.
A spokeswoman of the company denied knowledge of such an investigation but said Kodak would cooperate with any probe. SEC requires public companies to disseminate information on material events in an accurate and timely manner.
Kodak’s announcement of loan from President Donald Trump’s administration was reported by local media in Rochester, New York, where it’s headquartered, after the company apparently sent out a release without stipulating a timeline for when the story could be published, the Journal noted.
SEC is also probing options granted to Kodak executives on July 27, which became profitable on the very day the loan offer became public information.
Why It Matters
The legacy photography company’s shares soared 222% after it announced it had forayed into drug ingredient development and had received a government loan.
Kodak Chairman and CEO Jim Continenza was granted options on 1.75 million shares, a day before the announcement. A quarter of these were vested on the day the loan was granted, according to the Journal.
The remaining options will become exercisable if $100 million in convertible notes issued by the company last year are turned into shares by investors. As of Monday, $95 million in the notes had been converted, the company said Monday.
Continenza also raised eyebrows for purchasing 46,737 shares of the company on June 23 at the average price of $2.22. The executive had earlier purchased shares of the company in August and November last year and in March this year.
Kodak shares closed 3.6% lower at $14.40 on Tuesday and gained nearly 0.7% in the after-hours session.
Photo by El Grafo on Wikimedia
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