Kodak did not break the law. A new hope!
For those of you who are not aware. Kodak Eastman came under intense scrutiny earlier this year. But, there is still hope for this declining company.
Kodak operates in a declining industry. With revenue down over the last five years, and the global pandemic adding to the pressure. The quarter ending June 2020 was reported to be down 20.22% from the previous quarter.
The global pandemic, however, created some opportunity for Kodak. With a loan offered to expand their operations into the manufacturing of drug ingredients. Due to the chemicals and labs that Kodak already have available, this seemed like a perfect fit.
The loan was subsequently put on hold. Pending an investigation into Kodak.
What then went wrong?
From the chart above, you will note that the share price on the 27th of July 2020 was $2,62. On the 29th of July the share price increased to $33,20. The share price increased based on an announcement that was released indicating that Kodak will receive the government loan of $765 million. The problem is that the announcement and subsequent share spike was before the information was officially released. Raising concerns around the timing.
The share price dropped back to the $5-$6 mark.
A ray of hope
A special committee was appointed by the Kodak board and they hired Akin group to investigate the allegations. The committee reported that although they identified several governance issues, they are satisfied that Kodak did not break the law. They blamed a junior employee and recommended that Kodak update their outdated policies and strengthen their governance.
The FED still needs to decide based on their own investigation into Kodak. And at this time, it is unclear if the loan will come to fruition.
The findings from Akin is positive. And investors are seeing a ray of hope. At the time of writing, the share price jumped to $9,83.
For more detail on The Easy Investors previous report, you can watch our YouTube video here: https://www.youtube.com/watch?v=77Bo7-tT72c
