Trump says government to review $765M Kodak loan deal
President Trump said Tuesday that the government will investigate a deal secured by Kodak for a $765 million government loan to produce drugs at its factories in the U.S.
Trump said at a press conference Tuesday that he believed the deal would help Kodak expand into a new sector, but that he was not personally involved in crafting the arrangement.
“The concept of the deal is good…We’ll do a little study on that. We’ll find out. If there is any problem, we’ll let you know about it very quickly,” he said. “I wasn’t involved in it. It’s a big deal, it’s a way of bringing back a great area, in addition to pharmaceuticals.”
The deal, which was first announced in late July, would involve the first loan of its kind under the Defense Production Act (DPA) and will be focused on producing ingredients for generic drugs.
White House trade adviser Peter Navarro said at the time it was a “big win” and would help ease American reliance on foreign supply chains, an issue that has been thrust into the spotlight during the coronavirus pandemic.
But reports surfaced Tuesday that the Securities and Exchange Commission (SEC) was investigating the arrangement after Sen. Elizabeth Warren (D-Mass.) asked the agency to investigate any possible connection between the granting of the loan and several trades and executive purchases of Eastman Kodak stock.
Warren specifically asked SEC Chairman Jay Clayton to investigate “several instances of unusual trading activity” involving Kodak stock one day before the federal government announced it would lend $765 million to the company to produce pharmaceuticals in the U.S.
“Over the last year, the average trading volume of Kodak’s stock has been 236,479 shares per day. On Monday, July 27, however, a day before the public announcement, 1,645,719 shares, almost eight times the daily average, were traded,” Warren wrote, citing a CNBC report.
The Massachusetts lawmaker also pressed Clayton to prove the June 23 purchases of roughly 46,700 shares of Kodak stock by Eastman Kodak Executive Chairman James Continenza and 5,000 shares by board member Philippe Katz, saying they were purchased “while the company was involved in secret negotiations with the government over a lucrative contract.”
A spokesperson for Kodak told The Hill in a statement that Continenza “has regularly purchased Kodak shares with his own money since joining the Company in 2013 … because he strongly believes in the long-term success of the Company.”
The White House did not immediately respond to a request for further details regarding how the administration plans to probe the Kodak deal.