The general manager of
Eastman Kodak Co.
said the company supports a federal agency’s decision to suspend a potential loan to the company, supporting the move into
first call for results since the potential deal was announced about two weeks ago.
Kodak CEO Jim Continenza said on Tuesday that the preliminary deal with the government needed more work. He also said Kodak was a solid choice for the potential deal because of the company’s history in chemical manufacturing and its “vast infrastructure,” among other attributes.
Mr Continenza said the company will continue to produce supplies to combat the coronavirus pandemic, such as face shields.
Kodak posted a loss of $ 5 million in the second quarter, compared to a profit of $ 201 million a year ago.
In a regulatory brief released on Tuesday, the company highlighted the potential risks facing its initiative to produce drug ingredients with the potential loan.
The initiative is managed by Kodak’s pharmaceutical subsidiary, and its “economic success” will depend on the ability of its drug ingredients to compete with “low-cost countries such as China and India” and any possible “buy-in” mandate. American ”, the deposit mentioned.
If Kodak’s products cannot compete, the “Kodak subsidiary might not be able to distribute profits” to the parent company or repay the government loan, according to the filing.
Kodak said it did not expect to be responsible for repaying the federal loan if its pharmaceutical subsidiary were to default on debt, although the parent company could lose all the assets it had provided to the new operation. .
The company also said that if the loan fails, Kodak plans to continue expanding into drug ingredients at its headquarters in Rochester, NY.
The past few weeks have been tumultuous for Kodak.
On July 28, the Rochester, NY company and the Trump administration said the former photography giant was online to receive a loan of $ 765 million from a federal agency to assist in the manufacture of drug ingredients. The administration has said it wants to speed up domestic production of pharmaceuticals that can treat a variety of medical conditions and loosen the United States’ reliance on foreign sources.
In the days following the disclosure, the company’s shares surged, then fell precipitously. The Securities and Exchange Commission and several Congress panels to have opened investigations into how the company disclosed the agreement and the schedule of options grants given to Mr. Continenza.
A spokeswoman for Kodak said the company will cooperate with any SEC investigation and congressional investigation. None of Kodak’s senior executives have reported selling shares since the stock price shot up, and the company said Continenza has no plans to sell Kodak shares.
Late Friday, the government agency administering the loan program said its the agreement with Kodak was pending until the company is cleared of any allegation of wrongdoing.
The Wall Street Journal reported on Tuesday that a Kodak insider, board member George Karfunkel, and his wife donated $ 116 million in Kodak stock to a religious charity Mr. Karfunkel started. The Karfunkels’ donation could generate tens of millions of dollars in tax benefits for the couple, who have homes in New York and Florida, according to real estate records.
The securities deposit shows that the giveaway took place on July 29, the day Kodak stock closed at its highest level since 2014. Using the stock’s average highs and lows on that day of $ 38.75 is how the Internal Revenue Service evaluates stock gifts, the donation was worth $ 116.3 million.
This would make it the largest donation ever recorded to a religious group, based on a list maintained by the Chronicle of Philanthropy.
—Geoffrey Rogow contributed to this article.
Write to Rachael Levy at email@example.com
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