Kodak is on a roll after getting the green signal from the review committee that no laws were broken with loan funding of $765 million from the U.S. government.
Eastman Kodak Co. (KODK) soared 51.9% in the premarket on Wednesday with a quite heavy volume coming in. The shares price of KODK have made a strong move after a special committee declared that the company did not break any law in concern with the U.S. government loan.
The stock price started to push higher as it began today’s trading session. KODK Closed the trading at around $6.23 on Sept. 15 and pumped to $9.63 at 9:30 A.M. EDT today. So far, it has touched the highest mark of $9.83 as of 9:45 A.M EDT.
Eastman Kodak hired a special committee to investigate whether the U.S. government loan was lawful or unlawful. It was suspected that the company used illegal means and broke the laws in attaining a loan of $767 million from the U.S. government.
After a legal review, it was reported that the company had mishandled the process, however, the stock transactions by Kodak’s CEO and a board member did not constitute insider trading or broke any laws.
The lawyers at Akin Gump Strauss Hauer & Feld LLP mentioned that Kodak’s conduct did not violate the law, but the situation is still under examination by the U.S. securities regulators and Congress. The lawyers wrote:
“The manner in which the options grants were awarded was sub-optimal in a number of respects.”
The review reflected that Kodak’s general counsel instructions did not properly address the board on legal risks of providing the grants to the CEO and executive chairman, Jim Continenza, ahead of positive corporate news. The CEO of the company obtained the grants one day before Kodak was awarded $765 million by Rochester, a New York-based company. These grants were awarded for manufacturing pharmaceutical materials as part of a Covid-19 government loan program.
In addition, the review also addressed several legal quandaries facing Kodak. The report stated that the stock transactions by Continenza and Philippe Katz (Board member) did not practice insider trading as the general counsel of Kodak had mentioned that the government loan was at ‘a highly uncertain stage’ at that time.
Moreover, the donation of shares by another director, George Karfunkel were also declared lawful. The lawyers stated that they relied on Karfunkel’s characterization of the donation, which is expected to be around $100 million.
At the time of writing, as of 12:07 P.M. EDT, Eastman Kodak Co. (KODK) had spiked by 43.58% trading at $8.96.