Kodak Shares Plunge After US Freezes $765 Million Loan As Financial Allegations Raise 'Serious Concerns'

The U.S. International Development Finance Corp. said it will not proceed with a $765 million loan to Kodak, aimed at helping it produce pharmaceuticals for the government, until 'allegations of wrongdoing are cleared.'

Eastman Kodak (KODK) - Get Report shares plunged Monday after U.S. officials froze a $765 million loan to the group amid allegations of wrongdoing and a reported investigation by the Securities and Exchange Commission.

The U.S. International Development Finance Corp., known as the DFC, said it will not proceed with the loan, which was granted last month to the photographic equipment-maker to help it transition to producing pharmaceuticals for the U.S. government, until 'serious' allegations of wrongdoing were addressed.

"Recent allegations of wrongdoing raise serious concerns," the DFC said over the weekend. "We will not proceed any further unless these allegations are cleared."

Kodak shares were marked 37.9% lower in early trading Monday to indicate at $9.48 each. The shares, which traded at $2.65 prior to the July 28 loan announcement, reached as high as $60.00 each in the days after the surprise agreement.

The surge prompted a second look at the loan details from the chair of the U.S. House Financial Services Committee, Maxine Waters, who also urged the Securities and Exchange Commission to probe details of stock options granted to Kodak executives in the days prior to the DFC loan.

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