A resurgence in demand for photo and motion picture film has Eastman Kodak Co. in need of more workers.
Kodak is running its film finishing factory around the clock and needs additional workers to cover the workload, a company spokesperson said.
The increased demand stems from the fact that many amateur photographers have rediscovered film as part of the trend toward analog technology and many directors and cinematographers prefer the look of film for everything from music videos to feature movies, the company reported.
Kodak has 75 open positions in Rochester, mostly for operators and skilled trades’ positions.
Its Advanced Materials and Chemicals division – which includes film manufacturing – has hired more than 350 employees since 2021.
Kodak has a 130-year legacy in film manufacturing.
The American Chemical Society recently bestowed the company with The Birthplace of Consumer Photography landmark designation, recognizing Kodak’s legacy in chemistry and future in advanced materials and chemicals.
Eastman Kodak Co. after the bell on Tuesday reported an improved third-quarter bottom line.
Sales for the quarter ended Sept. 30 were $287 million, up from $252 million in the third quarter last year. Net income for the quarter rose to $8 million from a net loss of $445 million in the year-ago quarter.
“I’m pleased with our continued improvement in the third quarter despite challenges posed by supply chain issues, labor shortages and inflationary pressures,” said Kodak Executive Chairman and CEO Jim Continenza in a statement. “Our core print business has achieved increased market share in environmentally-friendly process-free plates and we are well-positioned to continue growing that important segment. Looking forward, we’ll continue to execute our go-to-market strategy focused on driving profitable revenue and growth.”
During an earnings call, Continenza said that the company is seeing a resurgence in its film business.
“More people are shooting still film, and the motion picture industry is choosing film as the ideal medium for their productions. As a result, we are increasing the capacity of our film factory,” he noted.
Kodak ended the third quarter with $380 million in cash and cash equivalents, an increase of $184 million from Dec. 31, 2020.
“During the third quarter we continued to see strong growth in our key product areas, including SONORA Process Free Plates volume and PROSPER annuities which were up 35 and 17 percent respectively compared to the prior-year quarter,” said Kodak CFO David Bullwinkle. “Kodak used $15 million in cash for the quarter, primarily driven by ongoing global cost increases which we are taking actions to address. We will continue to execute on our long-term plan — focusing on our core businesses and investing in future growth.”
Shares of Kodak stock (NYSE: KODK) closed Tuesday at $7.16 and was down more than 2 percent to $6.88 at the start of the day Wednesday.
An Eastman Kodak Co. scientist has been recognized in the inaugural Forbes 50 over 50: Vision List.
The new list highlights the exceptional women who are shaping the future of science, technology and art. Kodak Research Fellow and Senior Scientist Mridula Nair was named to the list.
“The visionaries on the list are leaving a lasting imprint on society and culture with their unique scientific and artistic visions,” said ForbesWomen Editor Maggie McGrath. “Through their dynamic ideas they are proving that there is no deadline for success – or for the most creative and fulfilling years of your life.”
Nair has some 136 U.S. patents, a majority of which were earned after she turned 50. She began working at Kodak in 1980 and her work across chemical synthesis, formulation science, dispersion and coating technologies, manufacturing and commercialization have sparked several key business concepts.
“It is by being a fearless idealist and creative problem solver that I have been able to innovate across businesses and generate a portfolio of patents for Kodak,” Nair said. “I could not have accomplished this without bold, innovative thinking and having a high-performing team to propel our ideas forward.”
Nair’s recent work has focused on light management, as she has invested a disruptive engineered microparticle technology to create smart opacifying textile coatings including Kodak’s Kodalux Fabric Coating.
Eastman Kodak Co. after the bell Tuesday reported an improved bottom line and encouraging cash balance in the second quarter.
For the quarter ended June 30, the one-time photo giant posted sales of $291 million, up from $213 million in the year-ago quarter. GAAP net income for the quarter rose to $16 million, compared with a loss of $5 million in the same quarter last year.
“I am encouraged by our financial performance for the quarter, which included year-over-year improvements in revenues and Operational EBITDA across all of our divisions,” said David Bullwinkle, Kodak’s CFO. “During the second quarter, we used $6 million in cash, an improvement of more than $20 million compared to the prior-year quarter, driven by increases in revenue and profit. We will continue to focus on the execution of our long-term plan.”
Kodak’s traditional printing division revenue was up significantly in the quarter from $119 million to $169 million. Digital printing rose $10 million to $62 million, while advanced materials and chemicals rose to $54 million from $38 million in the year-ago quarter.
Kodak ended the quarter with $395 million, compared with $196 million in the second quarter last year.
Shares of company stock (NYSE: KODK) opened Wednesday at $7.24 and were on the rise in the first few minutes of trading.
New York state Attorney General Letitia James on Tuesday petitioned the court to force Eastman Kodak Co. CEO Jim Continenza to publicly testify about his stock purchase last year ahead of the federal government’s announcement that Kodak was in line to receive a $655 million loan to build its chemical business.
According to James, “Continenza made the purchase while he was leading secret discussions with the Trump White House and the federal government” for the loan that would enable Kodak to repurpose legacy assets here to produce drugs necessary to fight the pandemic. Continenza had purchased nearly 47,000 shares ahead of the loan announcement.
“Corporate greed will never go unchecked in New York,” James said in a statement on June 1. “As millions of New Yorkers and Americans across this nation lost their jobs and were waiting for unemployment checks, Kodak’s CEO was using insider information to illegally trade company stock. Kodak even doubled down on this fraud by relaying false information to investors before the company’s annual meeting that took place last month.
“Corporate executives don’t get to play by their own rules, which is why today’s action seeks to shine a light on Kodak and Mr. Continenza’s unlawful behavior and level the playing field,” James added. “We are asking the court to order Mr. Continenza to testify in open court, so the facts can be exposed before the American people. My office will use every tool at its disposal to hold those who violated the law accountable.”
At issue is Continenza’s purchase of 46,737 shares of Kodak stock at a weighted average price of $2.22 per share made on June 23, 2020. The stock purchase was made one week after the company filed a confidential application for the $655 million loan from the federal government to develop a new business that would produce chemicals necessary for patients hospitalized with COVID-19.
The new pharmaceutical project, also billed as a way to bring generic drug production back to the U.S., was expected to increase revenues at the company by more than $300 million annually by 2025.
Kodak officials responded to James’ petition after the bell on Tuesday, stating that Continenza was not in possession of material non-public information and, “contrary to the Attorney General’s allegations, his small stock purchase was pre-approved by Kodak’s General Counsel during an open trading window in accordance with Kodak’s insider trading policy and was subsequently found to be compliant by outside counsel in an independent investigation.” Continenza has reportedly purchased Kodak stock in nearly every open window period and has never sold any of his shares.
“This morning the New York Attorney General filed an application in New York state court seeking investigative testimony and documents from Kodak. Prior to this filing, the company repeatedly offered to make witnesses available and the Attorney General repeatedly declined,” Kodak officials said. “It is telling that she has now chosen to publicly seek this order asking for the very testimony in which she previously had no interest.”
According to the petition, “Kodak’s loan application followed extensive confidential dealings — led by Continenza personally — held directly with the White House and other federal officials.” The petition notes that Kodak gave the pharmaceuticals project a code name, “Project Tiger,” to maintain confidentiality.
On June 18, 2020, Kodak sent Project Tiger team members, including Kodak executives, an email linking to an internal memo. The memo warned that it was illegal to trade Kodak stock while in possession of material, non-public information and reminded the recipients to “pre-clear any transaction with [Kodak’s General Counsel] prior to trading,” according to the petition.
The memo stated: Kodak is a publicly traded company. It is illegal to trade in the securities of a publicly-traded company while you are in possession of material information regarding Kodak that is not generally available to the public. . . . The penalties for such illegal activity are severe and may involve fines and/or incarceration. The information you receive in the course of Kodak’s consideration of the Project may from time to time constitute such material non-public information. If you decide to trade in Kodak securities while the project is on-going, you must pre-clear any transaction with [Kodak’s General Counsel] prior to trading.
A little more than a month after Continenza’s stock purchase, Kodak signed a public letter of interest with the federal government for the loan — which had grown to $765 million — causing Kodak stock to soar. The day after the news was announced Kodak’s stock price reached a high of $60 per share, more than 27 times what Continenza had paid for the stock weeks earlier.
James’ petition also informs the court about alleged false statements Kodak made to investors about the circumstances of Continenza’s insider trading. Specifically, on May 17, 2021 — in two separate public filings with the Securities and Exchange Commission — Kodak disclosed that it anticipated being sued by the Office of the Attorney General (OAG) because of Continenza’s trading.
According to the petition, Kodak falsely stated in the disclosures that Continenza’s June 23, 2020, trading was “in compliance with the company’s insider trading policy, including pre-approval by its general counsel.” James alleges that Kodak’s insider trading policy requires pre-clearance to be sought by email at least one day prior to the trading and for the requester to receive a response approving the trading — neither of which James said occurred.
“These false and misleading disclosures occurred just two days before Kodak’s annual meeting during which shareholders voted on retaining Continenza as executive chairman of the company and on endorsing his compensation package,” the attorney general contends.
The U.S. International Development Finance Corp. scrapped the loan in August, as news of an SEC investigation into potential wrongdoing broke. An independent firm hired by Kodak to investigate the claims found that no laws were broken by the company ahead of the loan announcement.
“In addition to being wrong on the facts, the attorney general’s novel and highly problematic legal theory that seeks to impose liability in the absence of intent would have a chilling effect on directors and executives of every public company, who could never invest in their own companies without fear of having good-faith decisions, pre-approved by counsel, second-guessed by regulators and charged as insider trading,” Kodak officials said in their statement Tuesday. “We are confident that the facts and the law are on our side and are prepared to present our case in court if there becomes a need to do so.”
Shares of company stock (NYSE: KODK) closed Tuesday at $7.51 and were $7.55 in pre-market trading Wednesday.
Eastman Kodak Co. this week reported a first-quarter drop in sales but a hefty improvement in its bottom line.
For the quarter ended March 31, revenues declined by $2 million to $265 million, compared with the same period in 2020. Net income for the quarter was $6 million, up from a loss of $111 million in the year-ago quarter.
The prior-year quarter net loss includes an expense of $167 million related to the increase in deferred tax valuation allowances for locations outside the U.S. and income of $53 million related to the change in fair value of embedded derivatives in the Series A Preferred Stock and Convertible Notes.
“The steps we have taken in the last two years — strengthening our balance sheet, establishing a customer-first approach and continuing to invest in innovation — have created the foundation for growth,” said Kodak’s Executive Chairman and CEO Jim Continenza. “We will continue to execute on those strategies to create long-term value for our shareholders and our employees.”
Kodak ended the first quarter with a cash balance of $401 million, up from the Dec. 31 cash balance of $196 million.
“We continued to see improved cash performance during the first quarter, including an improvement in working capital and an increase in our cash balance through several financing transactions that closed during the quarter,” said David Bullwinkle, Kodak’s CFO. “During the first quarter, we returned to growth in our key product areas, including SONORA Process Free Plates volume and PROSPER annuities which were up 8 and 12 percent respectively compared with the first quarter of 2020. We will continue to evaluate strategies for investing the capital raised through financing activities to generate additional growth.”
Shares of company stock (NYSE: KODK) Thursday morning were trading up slightly at $6.83.
Eastman Kodak on Monday said it has acquired the assets of ECRM Inc.’s computer-to-plate (CTP) device business for the graphic arts and newspaper industries.
Based in Massachusetts, ECRM is a global leader in imaging technologies for the graphic communications industry, officials said. The transaction includes the equipment, contracts, inventory and intellectual property of the acquired business. Financial terms of the transaction were not disclosed.
“This acquisition reflects Kodak’s commitment to the printing industry and our focus on investing in growth,” said Kodak Executive Chairman and CEO Jim Continenza in a statement. “Acquiring these assets of an impressive company like ECRM makes us an even stronger player in the CTP category and we will continue to look for ways to better serve customers across the spectrum of traditional and digital print.”
The acquisition is expected to further strengthen Kodak’s position in the CTP segment of the commercial printing industry.
“In the wake of a challenging pandemic year, and on the anniversary of ECRM’s 50th year, we decided that this is a good time to rest on our past successes, yet protect and service our many long-term customers with an established company of appropriate size, CTP competence and resources. We are pleased today to place our company assets with Kodak,” said Rick Black, chairman and CEO of ECRM.
Shares of Kodak stock (NYSE: KODK) were trading down 19 cents at $7.23 midday Monday.
Eastman Kodak Co. after the bell on Tuesday reported full-year financial results that include a steep decline in revenues and a net loss of $196 million for the year.
For the full year ended Dec. 31, the Rochester company reported consolidated revenues of $1 billion, compared with $1.2 billion in 2019. Kodak reported a net loss of $541 million, compared with earnings of $116 million in the prior year.
Kodak reported a cash balance of $196 million at year-end.
On March 1, 2021, the company announced a series of financial transactions that provide access to new capital, address maturing obligations and strengthen the company’s ability to invest in strategic growth opportunities in its core businesses. Included in those transactions is a $100 million investment by Grand Oaks Capital, an investment firm started by Paychex founder Tom Golisano. Kodak officials said the additional liquidity provided by the financial transactions “eliminates the substantial doubt about Kodak’s ability to continue as a going concern.”
“Kodak successfully managed through 2020 despite the challenges of the pandemic,” said Kodak CEO and Executive Chairman Jim Continenza. “We mitigated the impact of COVID with cost-saving initiatives, launched several innovative print-business products and generated cash in the third and fourth quarters. More recently, we announced a series of financial transactions which significantly strengthened our balance sheet and set the stage for growth through investments in our core businesses in print and advanced materials and chemicals, and new initiatives.”
The company’s loss for the year included a charge of $416 million to reflect the increased value of the derivative liability embedded in the convertible notes immediately prior to conversion during the third quarter 2020, as well as expenses of $167 million related to the increase in deferred tax valuation allowances for locations outside the U.S. during the first quarter of 2020. Operational EBITDA was negative $1 million for the year, compared with $13 million in 2019.
“Kodak increased its cash balance in the third and fourth quarters by $16 million and ended the year at $196 million in cash,” said CFO David Bullwinkle. “During 2020 the company improved its financial health by removing legacy liabilities and reducing costs, and the recently announced transactions put Kodak in a strong financial position and provide incremental liquidity to drive growth.”
Shares of company stock (NYSE: KODK) closed Tuesday at $8.75 and were down more than 5 percent midday Wednesday to $8.24.
Grand Oaks Capital, an investment firm founded by Paychex founder Tom Golisano, has committed to invest a total of $100 million in Eastman Kodak Co.
The firm purchased $75 million of Kodak’s 5 percent Series C Convertible Preferred Stock and has agreed to purchase an additional $25 million of this series of preferred stock subject to HSR Act clearance. As part of the agreement, Grand Oaks Capital will have the right — for three years or until they hold less than 50% of the initial amount of the preferred shares or common stock into which it is converted — to nominate one person to be elected to Kodak’s board of directors.
“Grand Oaks Capital is excited about the long-term future of Kodak,” Golisano said in a statement. “We are very confident in the company’s leadership, vision and new growth opportunities and are proud to be investing in a global company headquartered in Rochester, N.Y.”
Additionally, Kennedy Lewis Investment Management LLC has provided Kodak with an initial $225 million term loan and a commitment to provide delayed-draw term loans of up to an additional $50 million, which may be drawn on or before February 26, 2023. The term loans have a five-year maturity and are non-amortizing.
Kennedy Lewis also has purchased 1 million shares of the company’s common stock at a purchase price of $10 per share, as well as $25 million of the company’s newly issued 5 percent unsecured convertible promissory notes due May 28, 2026. As part of the agreement, Kennedy Lewis will have the right for three years to nominate one person to be elected to Kodak’s board of directors.
“Kodak has made tremendous strides over the last few years under Jim Continenza’s leadership. We are pleased to support the company in its continued efforts to fortify its balance sheet and provide the capital assistance needed to enable Kodak to pivot forward to pursue its strategic growth initiatives. We feel strongly that the company is well positioned for the future,” said Darren Richman, co-founder of Kennedy Lewis.
With the proceeds from the transactions, Kodak repurchased 1 million shares of the company’s 5.5 percent Series A Convertible Preferred Stock due to mature on Nov. 15, 2021, from funds managed by Southeastern Asset Management for $100 million plus accrued and unpaid dividends. In addition, Kodak has issued the Southeastern-managed funds one million shares of Series B Preferred Stock in exchange for the remaining Series A Preferred Stock held by the funds, plus payment of accrued and unpaid dividends.
“Since Jim Continenza and his team took over at Kodak, there have been dramatic improvements in operating costs and the balance sheet, as well as new product introductions. Jim’s team has also opened up the possibility of new business lines which would build on legacy assets and institutional strengths,” said Staley Cates, vice-chairman of Southeastern Asset Management.
Kodak has entered into a cash collateralized Letter of Credit Facility Agreement for up to $50 million and amended its ABL Credit Agreement to extend the maturity date to Feb. 26, 2024, and decrease the aggregate commitments from $110 million to $90 million.
The transactions provide the company with up to $310 million of incremental cash to invest in growth opportunities in Kodak’s core businesses of print and advanced materials and chemicals, officials said Wednesday.
The transactions address the mandatory redemption of the Series A Preferred Stock that was required in November 2021, extend the maturity date of the company’s ABL and limit the amount of cash needed to service capital.
“Over the past two years, we have taken a number of significant steps to strengthen our financial position,” said Continenza, Kodak’s executive chairman and CEO. “Financing secured through Kennedy Lewis and investments made by Grand Oaks Capital and funds managed by Southeastern Asset Management represent the next step in our strategy for returning the company to growth and help position us to invest in expanding our core businesses in print and advanced materials and chemicals.”
Shares of company stock (NYSE: KODK) closed Tuesday at $8.62 and were moving upward Wednesday afternoon. Shares were up 8 percent to $9.31 at 3:30 p.m.
Former Eastman Kodak Co. leader Colby Chandler died March 4. He was 95.
Mr. Chandler joined Kodak in the 1950s and served as chairman and CEO from 1983 to 1990. He presided over the company when Kodak employed more than 60,000 people in Rochester.
Mr. Chandler was a graduate of the University of Maine and received his MBA from the Sloan Fellows program of the MIT Sloan School of Management.
Throughout his life, Mr. Chandler served on a number of boards and in advisory roles. He was chairman of President Ronald Reagan’s Export Council. He was a director of Rochester companies Pictometry International Corp. and VirtualScopics Inc. He was chairman of the Industrial Management Council, which later merged with the Greater Rochester Metro Chamber of Commerce Inc. to become the Rochester Business Alliance Inc., now the Greater Rochester Chamber of Commerce Inc.
“Even after 14 years of retirement, if somebody said to me, ‘Would you like to go back to work doing what you did before?’ I would jump at the chance,” Chandler told the RBJ in a 2004 interview.
Mr. Chandler was a proponent of the manufacturing sector and eschewed a shift to service industries.
″Watching the swing toward a service-intensive society and listening to some parties say that’s good is scary,″ he told the Associated Press in a 1988 interview.
In his spare time, Mr. Chandler was a tennis player and avid reader. He told the RBJ that when he retired he had some 1,000 books and nearly all were non-fiction. That changed when his tennis group became a book club.
“(With the club) I would say two out of the three books are fiction. And I love it. I love the discussions,” he told the RBJ.
Funeral services are being provided by Anthony Funeral Home. No memorial events are currently scheduled.
Eastman Kodak Co. shares surged on Monday on news that regulators had found no wrongdoing in a loan process that would have had the company manufacturing chemicals for COVID-19 and generic drugs.
Following a report from the Wall Street Journal indicating that government officials had done nothing wrong in the days and weeks leading up to the announcement of a $765 million loan Kodak was expected to be awarded, shares of Kodak stock (NYSE: KODK) rallied more than 80 percent on Monday, closing the day up 60 percent at $12.04.
The Wall Street Journal on Sunday reported that the inspector general of the U.S. International Development Finance Corp., the agency that in July signed a letter of interest with Kodak to provide the loan, found no wrongdoing in the process that created the loan. That follows an internal investigation on behalf of Kodak that cleared the company in September.
In the DFC report, Inspector General Anthony Zakel said he found no evidence that employees of the agency had any conflicts of interest in the plans, according to the Wall Street Journal story. Zakel also said he did not find “any evidence of misconduct on the part of DFC officials.”
The DFC assessment also stated that it was reasonable for the agency to consider Kodak for the loan, noting other companies’ pivots to COVID-19 supply-chain manufacturing and Kodak’s experience providing materials to the pharmaceutical industry.
The Securities & Exchange Commission and Congress also launched investigations into the deal, neither of which have been concluded.
When Kodak and the DFC on July 28 announced details of the loan, which had not been finalized, Kodak shares soared from a July 27 close at $2.62 to more than $16. Within two days, shares had reached $43.45, and at one point the stock reached $60 per share.
A week later, the SEC and Congress said they would look into the possibility of misconduct on behalf of Kodak leaders. Kodak Executive Chairman James Continenza was issued 1.75 million stock options by the board the day before the loan announcement, triggering an outcry by investors and the public.
SEC filings showed that Continenza purchased 46,700 additional shares of Kodak stock, while board member Philippe Katz purchased 5,000 shares on the same day. In an interview with CNBC following the announcement, Continenza said Kodak had been working on the loan deal for a “few months” prior to the July 28 announcement.
The potential windfall from the $765 million loan would have allowed Kodak to reinvent itself with a new division, Kodak Pharmaceuticals, that would manufacture components of generic drugs and enable the U.S. to rely less on China for its pharmaceuticals. It is unclear whether the DFC loan is still on the table, but Kodak officials have repeatedly said the company will move ahead in making the drug ingredients, regardless of whether it receives government assistance.
While Kodak’s internal investigation by an independent law firm found that company executives and officers did not participate in insider trading, the report has no legal bearing on the SEC investigation, said an analyst with ASB Capital in a November Seeking Alpha article. Moreover, this week’s DFC report doesn’t specifically clear Kodak of wrongdoing either.
Shares of company stock midday Tuesday were trading down from Monday’s surge at $11.27.
After the bell on Tuesday, Eastman Kodak Co. reported a third-quarter decline in sales of $63 million and a net loss for the quarter of $445 million. Shares of company stock (NYSE: KODK) were down roughly 2 percent to $6.55 in light trading Wednesday at midday.
For the quarter ended Sept. 30, the one-time photo giant reported revenue of $249 million, down from $313 million in the year-ago quarter. The quarterly loss of $445 million compares to a $5 million net loss in the third quarter last year.
“As the pandemic continued during the third quarter, Kodak stayed focused on keeping our employees safe and serving customers while carefully managing our costs and cash,” said Kodak Executive Chairman and CEO Jim Continenza. “We continue to invest in leading-edge digital print technology, and winning eight awards recently in three prestigious print industry competitions provides external validation of that commitment. Looking forward, we’ll continue to build on our strengths in print and advanced materials and chemicals, including our existing business in manufacturing pharmaceutical ingredients.”
Kodak ended the quarter with a cash balance of $193 million.
“Kodak delivered improved revenue compared with the second quarter of the year while improving its financial position,” said Kodak CFO David Bullwinkle. “During the third quarter, the company reduced its debt by $100 million due to the conversion of the convertible notes and its cash balance increased by $13 million.”
An independent legal review of Eastman Kodak Co.’s actions during and ahead of a July announcement that the Rochester manufacturer was in line to receive a massive loan to produce pharmaceuticals has concluded that the company and its executives broke no laws.
As a result, Kodak shares (NYSE: KODK) were up more than 40 percent midday Wednesday at $8.80.
The review, conducted by Akin Gump Strauss Hauer & Feld LLP and released on Tuesday, concluded that Kodak and its officers, directors and senior management “did not violate the securities regulations or other relevant laws, engage in a breach of fiduciary duty or violate any of Kodak’s internal policies and procedures.”
Akin Gump was retained by a special committee formed by Kodak’s board of directors to look into allegations of impropriety surrounding the July 28 signing of a letter of interest between the U.S. International Development Finance Corp. and Kodak that would result in a $765 million loan.
The potential windfall would allow Kodak to reinvent itself with a new division, Kodak Pharmaceuticals, that would manufacture components of generic drugs and enabling the U.S. to rely less on China for its pharmaceuticals.
The July 28 letter of interest noted that it was not a done deal and that the loan could be any dollar amount up to $765 million. Both Kodak and the DFC said at the time that they could continue due diligence.
But within days of the announcement, the U.S. Securities and Exchange Commission said it would investigate the transaction. Kodak Chairman and CEO Jim Continenza had been issued 1.75 million stock options by the board the day before the loan announcement, triggering an outcry from analysts and investors. SEC filings also showed that Continenza purchased 46,700 additional shares of Kodak stock, while board member Philippe Katz purchased 5,000 shares on the same day. Additionally, board member George Karfunkel the day after the July 28 announcement had gifted a large number of shares to a charity.
Each of those actions raised eyebrows and suspicion.
On Aug. 7, the DFC suspended the loan until an investigation could be completed. Kodak share price has ranged from $2.62 on the day before the official announcement to a one-time high of $60, with a July 29 closing price of $33.20. But in recent weeks, shares had languished at around $6 while the public awaited results from several investigations.
Specifically, Akin Gump was retained to investigate:
• Whether Katz or Continenza engaged in insider trading, violated Kodak’s internal policies and procedures or otherwise acted improperly in purchasing Kodak shares in June 2020.
• Whether Kodak’s award of stock options to Continenza and other members of Kodak’s senior management team on July 27, 2020, the day prior to the DFC announcement, violated Kodak’s internal policies and procedures or the federal securities laws or constituted a breach of fiduciary duty under applicable state law.
• Whether board member Karfunkel violated the federal securities laws or Kodak’s internal policies and procedures by donating 3 million Kodak shares to an affiliated charity the day after the DFC announcement, while Kodak’s trading window remained closed.
• Whether Moses Marx, the father-in-law of board member Katz, or Southeastern Asset
Management, a large Kodak investor that had nominated two of Kodak’s board members, sold shares of Kodak after the DFC Announcement while in possession of material nonpublic information obtained from any of Kodak’s officers, directors or employees.
• Whether Kodak was responsible for the early release of information related to the LOI on July 27, 2020, the day before the DFC Announcement, and, if so, whether that release violated Regulation Fair Disclosure, promulgated by the SEC.
The Akin Gump investigation revealed that both Katz and Continenza sought and obtained preclearance to trade from Kodak’s general counsel, in compliance with the company’s insider trading policies.
Additionally, the July 27, 2020 options grants complied with the terms of Kodak’s
Executive Compensation Plan and were approved by a group of “disinterested” directors acting in their capacity as members of Kodak’s Compensation, Nominating and Governance Committee. The grants — and in particular the grant to Continenza — had been discussed with the board well in advance of the start of the DFC loan application process and were awarded for legitimate business purposes unrelated to the DFC announcement, according to the investigation.
The investigation also found that Karfunkel’s gift the day after the announcement was a bona fide gift and therefore did not constitute a sale of securities for insider trading purposes.
As a result of Akin Gump’s findings, Kodak’s Special Committee has recommended that the company adopt corporate governance and procedural changes with respect to its executive compensation practices, insider trading policies and procedures regarding the disclosure of information about the company to the public.
“The board and I are grateful for the diligence and care that was taken by the Special Committee and by its counsel to perform such a thorough independent review. Kodak is committed to the highest levels of governance and transparency, and it is clear from the review’s findings that we need to take action to strengthen our practices, policies and procedures,” Continenza said in a statement late Tuesday. “Expeditiously implementing these recommended measures will be critical as we continue to execute on our long-term strategy and transform our business for the future.”
Eastman Kodak Co. shares (NYSE: KODK) in two days last month skyrocketed more than 1,100 percent, and plummeted 50 percent a few days later. Share price continues to fall following a blunder by Kodak leaders and an investigation by the U.S. Securities and Exchange Commission.
On Monday, shares were down again to $7.76 following White House trade adviser Peter Navarro criticizing Kodak management for their “stupidity” on CNBC.
“Based on what I’m seeing, what happened at Kodak was probably the dumbest decisions made by executives in corporate history,” Navarro said. “You can’t fix stupid. You can’t even anticipate that degree of stupidity.”
A spokeswoman for Kodak said “no comment” in response to Navarro’s criticism.
The criticism and SEC investigation stem from a possible leak of the loan announcement and the timing of stock awards to Kodak leaders, including Executive Chairman James Continenza. Continenza was issued 1.75 million stock options by the board the day before a $765 million loan announcement, triggering an outcry from analysts and investors.
On July 28, the U.S. International Development Finance Corp. (DFC) and Kodak had signed a letter of intent that would allow the photo giant to shift gears and begin producing generic drugs here. But the DFC within days put a hold on its loan in light of the SEC investigation.
On Aug. 10, White House Press Secretary Kayleigh McEnany said President Trump had used the Defense Production Act “more than 30 times” to increase production and is aware of the “Kodak allegations.”
“Would he pull the plug on this deal? I’ll leave that to the president, but he takes these (allegations) very seriously,” McEnany said. “We won’t speculate as to what this investigation finds.”
Share price has ranged from $2.62 on the day before the official announcement to a one-time high of $60, with a July 29 closing price of $33.20. The stock has continued to fall throughout August as Kodak performs its own internal investigation into the matter.
Last week the company reported a lackluster second-quarter. For the quarter ended June 30, Kodak reported a $94 million sales decline to $213 million and a net loss of $5 million. Kodak ended the quarter with a cash balance of $180 million, down from the March 31 balance of $209 million.
“Kodak continued to navigate the challenges posed by the pandemic during the second quarter,” Continenza said. “Although the print industry slowdown impacted our performance, we continued to serve our customers and furthered our long history of innovation through the launch of six new print products.”
The company did not offer full-year guidance nor address the DFC loan.
The U.S. International Development Finance Corp. (DFC) has put a hold on its $765 million loan to Eastman Kodak Co. in light of an investigation of the matter by the U.S. Securities and Exchange Commission. The agency made the announcement on Twitter Friday evening.
As a result, Kodak shares (NYSE: KODK) plummeted Monday more than 40 percent from Friday’s close at $14.88. By the close of trading, shares had rebounded slightly to $10.73.
When Kodak and the DFC on July 28 announced details of the loan, Kodak shares soared from a July 27 close at $2.62 to more than $16. By Wednesday morning, shares had reached $43.45.
But on Aug. 4, The Wall Street Journal reported that the U.S. Securities and Exchange Commission will investigate the circumstances surrounding the loan. Congressional leaders also are looking into both the loan and the substantial number of shares picked up by company leaders ahead of the announcement, according to a letter sent to Kodak Executive Chairman James Continenza.
Continenza was issued 1.75 million stock options by the board the day before the loan announcement, triggering an outcry from analysts and investors.
“On July 28, we signed a letter of interest with Eastman Kodak,” Friday’s DFC tweet read. “Recent allegations of wrongdoing raise serious concerns. We will not proceed any further unless these allegations are cleared.”
In a retweet of the DFC’s tweet Friday, Peter Navarro, assistant to the President and director of the Office of Trade and Manufacturing Policy at the White House, said “VERY disappointed last week’s great deal with Kodak tarnished by allegations. Absolutely RIGHT move by DFC! We must redouble efforts to bring our pharma manufacturing home!!”
The potential windfall would allow Kodak to reinvent itself with a new division, Kodak Pharmaceuticals, that would manufacture components of generic drugs.
The July 28 letter of interest noted that it was not a done deal and that the loan could be any dollar amount up to $765 million. Both Kodak and the DFC said at the time that they could continue due diligence.
On Monday, a Kodak spokesperson said the company appreciates and supports the DFC’s decision to await clarification before moving forward with the process. In fact, on Friday, Kodak said it had appointed a special committee of independent directors to oversee an internal review of “recent activity” by the company and related parties in connection with the loan.
The committee comprises directors Jason New and William Parrett and the internal review will be conducted for the committee by Akin Gump Strauss Hauer & Feld LLP.
Kodak is slated to report quarterly earnings on Tuesday.
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