Eastman Kodak Company (NYSE:KODK), which is best known for its photography business, had filed for bankruptcy back in 2012 as its business became unfeasible in the modern age. However, the company and its stock is now back in focus as it tries to move into a new business altogether. In this sort of situation, investors could do well to take a closer look at the latest developments at Kodak.
The Chemical Business
While it is true that digital cameras and smartphones proved to be a body blow to Kodak’s business, it should be noted that the company continued to have a chemical business. It manufactured a range of chemicals including the ones that are deployed in the development of films.
The chemical business has clients in a range of industries and one of those is the pharmaceutical sector. It’s involvement in the pharmaceutical sector has helped Kodak in becoming a point of focus among investors.
Due to the coronavirus pandemic, the United States wanted to speed up the production process of medical supplies. In order to accomplish this, Kodak emerged as the company that was awarded a $765 million loan in order to make the chemicals that are needed to produce certain medicines.
The Federal government loan grant was a significant development and after the formal announcement on July 29, the Kodak stock soared to $60 a share from $2 a share. However, questions about the deal surfaced soon after.
Questions and Aftermath
It later emerged that Kodak had spent as much as $870000 on lobbying between the months of April and June this year. In addition to that, a securities filing revealed that the Chief Executive Officer of the company James Continenza had been awarded as many as 1.75 million shares ahead of the announcement.
Due to these revelations, the government put a hold on the deal and started an investigation into wrongdoing allegations. The Board of Directors of the company did a review of its own and revealed that there had not been a violation of any laws.
However, the board admitted that there had been certain ‘flaws’. Since the loan has been put on hold, the stock soon retreated from new highs as well and went down from $60 a share to $9 a share.
It is easy to see why Kodak has been creating significant buzz in the news cycles in recent times. However, if the loan is eventually disbursed by the government, then the shares could rally strongly once again.
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