President Trump announces on July 28 that Eastman Kodak will receive a loan to make ingredients used in pharmaceuticals.

Alex Wong / Getty Images

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Alex Wong / Getty Images

President Trump announces on July 28 that Eastman Kodak will receive a loan to make ingredients used in pharmaceuticals.

Alex Wong / Getty Images

The Trump administration’s decision to hand over $ 765 million in taxpayer dollars to Eastman Kodak raised several questions about the financial control of the ailing camera company even before the deal was suspended as part of the deal. ” an investigation into possible insider trading.

President Trump has tapped into emotions and nostalgia for a bygone era, accusing Kodak of leading US efforts to bring pharmaceutical manufacturing back to the United States.

But the camera maker’s troubled story – it has failed to adapt to the digital age and has struggled in recent years – immediately raised concerns on Capitol Hill.

“I don’t want to see a once prestigious American brand go bankrupt. I like the idea that companies can continue; they can move into new spaces,” said a congressional adviser. “And if there’s a clear or useful way to do it here, I’m open-minded about it. … But why is Kodak the right company? “

The planned loan, if concluded, is made by a little-known government agency called the US International Development Finance Corp., or DFC, which provides loans in foreign countries. The president appealed to the obscure agency to find a way to boost American production of medical supplies.

Elizabeth Littlefield, a U.S. development veteran who, during Obama’s day, ran the agency that became DFC, said she was excited about the possibilities. But if the investment was wise, she asked, why couldn’t Kodak get the money some other way?

“I really hope this analysis has been thorough because there will be a lot of questions like, you know, why didn’t Kodak raise this money in the public market? It’s a publicly traded company,” she declared.

Trump said Kodak may have gone astray, but will now be part of efforts to achieve an “America First” priority of bringing manufacturing back to the United States and decoupling the country’s drug supply. which is packed in china.

“It’s a big name, when you think about it,” Trump said during the announcement last month. “Such a big name. It was one of the big brands in the world.”

But the DFC has now put the deal on hold after the Securities and Exchange Commission launched an investigation into possible insider trading after a massive amount of Kodak shares were traded the day before the loan was announced.

“You see all of this trading going on, and you see board members and other associates making billions of dollars out of a deal,” said Representative James Clyburn, DS.C., who has joined Democratic leaders to call for an investigation into the deal. .

Peter Navarro, the Trump trade adviser who helped lead the plan, tweeted: “VERY disappointed with last week’s deal with Kodak tarnished by allegations. Absolutely FAIR decision by DFC!”

Navarro added that the United States “must redouble its efforts to bring our pharmaceutical manufacturing home.”

Kodak has launched its own independent review of the shares, but has expressed confidence that talks with the administration will continue.

“The company appreciates and supports DFC’s decision to wait for clarification before moving forward with the process,” said Arielle Patrick, Kodak spokesperson.

But some financial analysts wonder if Kodak has the financial prowess to do it successfully.

George Conboy, a financial analyst based in Kodak’s hometown of Rochester, NY, said Kodak could never convince a bank to loan the company something close to what the government was considering. He mentions a smaller $ 100 million loan that Kodak secured last year from a private equity group at a higher interest rate – which also involved giving up a large stake in the company.

“You will not borrow money on these terms unless you find someone else to lend it to you on a more attractive basis,” said Conboy, chairman of Brighton Securities. “You don’t go to the loan shark if you can borrow against your mortgage.”

A senior US government official noted that it was not yet a loan, but simply a letter of interest. Officials said that while Kodak has successfully passed an initial screening process, including site visits and an interagency review, the government is only beginning the more rigorous verification process.

This process involves the DFC contracting with outside lawyers and accountants to deepen the company’s finances – a process that could take at least a few months.

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