(Reuters) – Eastman Kodak Co’s $ 765 million loan deal with the US government to produce pharmaceutical ingredients has been suspended due to “recent allegations of wrongdoing,” US International Development Finance said Corp (DFC).
Earlier this week, senior Democratic lawmakers called on federal regulators to investigate securities transactions made by the company and its executives around the time they learned they could receive the government loan.
“The recent allegations of wrongdoing raise serious concerns,” the DFC said in a tweet Friday night.
“We will not go any further until these allegations are clarified,” the DFC said. He was referring to a letter of interest he signed on July 28 with Kodak.
President Donald Trump said on Tuesday that the government would investigate the circumstances surrounding the announcement of the loan, which will help the photographic equipment maker to start manufacturing pharmaceuticals at its U.S. factories.
Kodak shares jumped more than 1,000% last week after the loan was announced, generating a windfall for executives, some of whom had received options a day earlier.
Lawmakers said they had “serious concerns” about the transactions and asked the Securities and Exchange Commission to investigate the circumstances surrounding the case. They reported growing concerns about insider trading.
The company said it has appointed a special committee of independent directors to its board of directors to conduct an internal review.
“The internal review will be performed for the committee by Akin Gump Strauss Hauer & Feld LLP,” Eastman Kodak said in a statement.
Report by Kanishka Singh in Bengaluru; Editing by Sonya Hepinstall