Kodak Shares Collapse After Government Loan is Put on Hold

Shares of Kodak were dropping as much as 42% on Monday after Wall Street learned that the government loan it was promised had been put on pause as allegations are being investigated.

It was this past Friday that the U.S. International Development Finance Corporation had tweeted, “Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.”

The agency is reviewing a previously announced $765 million loan for the onetime photography pioneer to produce drug ingredients.

The review of funding also comes as the Securities and Exchange Commission is reportedly investigating how the company disclosed the deal with the government.

Shares of Kodak had exploded 600% in just two days following the announcement of the loan.

The loan is the first of its kind under the Defense Production Act, and was meant to aid the company in its pivot to drug production. Kodak said it would use the loan to expand existing facilities in Rochester, New York and St. Paul, Minnesota under a new Kodak Pharmaceuticals arm, which would produce drugs to treat a wide variety of illnesses.

“Our 33rd use of the Defense Production Act will mobilize Kodak to make generic, active pharmaceutical ingredients,” president Donald Trump said when announcing the deal. “We will bring back our jobs and we will make America the world’s premier medical manufacturer and supplier.”

Trump later said he was “not involved” in the loan.

Disclaimer: We have no position in Eastman Kodak Company (NYSE: KODK) and have not been compensated for this article.