Kodak to Move Forward in Drug Ingredient Manufacturing Amid US Loan Problems
Managing Director Jim Continenza has defended his company’s handling of an interrupted US loan and said Kodak will continue to move forward in manufacturing pharmaceutical ingredients whether or not it receives government assistance.
Mr. Continenza’s comments at Monday’s WSJ Tech Live conference follow a tumultuous time for the former photo giant. In July, the company has reached a deal for $ 765 million with the US government to produce pharmaceutical ingredients, only to have its plans unfold quickly.
At the conference, Mr. Continenza declined to discuss the status of the loan, which the agency involved put on hold shortly after announcing it.
Shortly after announcing the planned agreement in July, the Securities and Exchange Commission started an investigation on how the company disclosed the loan, and several Democratic-led congressional committees have announced an investigation into the deal. The federal agency that had partnered with Kodak, the US International Development Finance Corp., suspended the deal and its own watchdog opened an internal review.
At the conference, Mr. Continenza acknowledged the uproar, recalling that “about two to three days later, he started going mad”. Asked whether the company acted too quickly to close the deal, Mr Continenza said, ‘it has come up quickly, but I think it needs to do that too,’ citing concerns concerning the dependence of the United States on foreign countries for drugs. He said Kodak had done its best to manage the deal, while admitting that his company was understaffed, especially amid the coronavirus pandemic.
Kodak has since conducted its own investigation into its handling of loan plans. This review revealed that the company did not violate any laws relating to the disclosure of the loan. Kodak’s review, however, revealed several governance issues at play. One issue was a donation of Kodak shares made by George Karfunkel, a member of the Kodak board of directors, on the same day that the stock price rose. peaked after the government’s announcement. Mr. Karfunkel donated stock, worth $ 116 million, to a religious charity he founded.
Asked at the Wall Street Journal conference about Mr. Karfunkel and whether he would stay on the company’s board, Mr. Continenza declined to answer. “He will be responsible for what he does,” Continenza said. Mr. Karfunkel could not be reached immediately for comment.
Another issue that emerged from the proposed transaction was Kodak’s timing for granting stock options to executives, including Mr. Continenza. Asked about the subsidies, Continenza said he had not sold any shares and that the subsidies “should not be the center of attention.”
The Journal reported earlier the Kodak plans were spearheaded by Peter Navarro, business advisor to President Trump, who worked with the International Development Finance Corp., a federal bank-like agency.
In late July, Trump administration officials said the Kodak alliance would help accelerate domestic production of drugs capable of treating a variety of medical conditions and ease the United States’ reliance on foreign sources in countries such as China and India. The needs were pressing, administration officials said, in light of the coronavirus pandemic, which quickly left the United States scrambling to treat those infected.
As part of the plan, Kodak would produce ingredients for a number of generic drugs, including the antimalarial drug hydroxychloroquine that President Trump has touted in the treatment of coronavirus, although researchers have said it has no benefit. as early outpatient treatment.
On the day the plan was announced, Mr. Trump called it “one of the most significant deals in the history of the US pharmaceutical industry.” My administration has entered into a historic agreement with a large American company.
Mr. Navarro, on Fox News, later called the Kodak plans a “blockbuster” the president designed.
After the deal was put on hold amid the SEC investigation, Mr Trump sought to distance himself, saying he was not involved.
The DFC was an unusual choice to manage such a program. Typically, the agency provides loans in developing countries, but in May it received approval to support the Covid-19 response.
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Write to Rachael Levy at [email protected]
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