US loan to Kodak will stop unless allegations are cleared: White House

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WASHINGTON (Reuters) – The U.S. government will not provide Eastman Kodak Co with a $ 765 million loan to manufacture drugs at its U.S. factories unless the company will in circumstances related to the announcement of the company Loan acquitted of alleged wrongdoing, the White House said on Monday.

FILE PHOTO: A worker cleans a Kodak booth at the Las Vegas Convention Center in preparation for CES 2019 in Las Vegas, Nevada, the United States, Jan. 6, 2019. REUTERS / Steve Marcus

White House press secretary Kayleigh McEnany made the remarks to reporters after US President Trump announced last week that the federal government would quickly investigate the issue.

The US International Development Finance Corp said Friday that the loan to help the photographic equipment maker that makes pharmaceutical ingredients has been suspended due to “recent allegations of wrongdoing”.

McEnany said the president took the allegations seriously but declined to say whether the loan could be canceled in full.

“We will not move forward until these allegations are resolved,” she said at a regular briefing, adding that the investigation was still ongoing.

She said the case did not shake the president’s confidence in using the Defense Production Act to increase U.S. stocks of ventilators and other equipment to respond to the pandemic.

News of the investigation and the suspension of the loan weighed heavily on Kodak stock, which traded 28% on the New York Stock Exchange on Monday afternoon at $ 10.70.

Initial news about the loan had propelled the stock 1,000% higher, delivering a godsend to executives, some of whom had been given options the day before.

Senior Democratic lawmakers last week urged federal regulators to investigate securities transactions by the company and its executives when they learned they could get the government loan.

Legislators said they had “serious concerns” about the transactions and asked the Securities and Exchange Commission to investigate the matter. They cited growing concerns about insider trading.

The company said it set up a special committee of independent directors from its board of directors to conduct an internal review.

Reporting by Jeff Mason and Andrea Shalal; Adaptation by Jonathan Oatis; Adaptation by Chris Reese

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