A Kodak Moment

Belgius Capital Commentary

Belgius Capital

A Kodak Moment

KODK.N, originally once world esteemed 'Eastman Kodak' of film and camera fame, sprang to spectacular life this past week rising near vertiginously.

On Monday the 27th, it sparkled to life gaining 25% in large volume, from where it had been trading around $1.50 per share for weeks and months. Whether this movement ahead of a major announcement will alert an insider dealing investigation remains to be seen.

On the 28th, Kodak announced to the Exchange a surprising agreement with the US Government entity 'US International Development Finance Corporation' [DFC] for an intended loan [letter of interest] of $765 million, but not yet finally approved. It would seem President Trump had specifically authorized the loan.

We find many aspects of this 'intention' unusual in as much as Kodak shareholders were warned as recently as May that the company had negligible value. Elsewhere and on another aspect, analysts at SVB Leerink opined in a research note that it was puzzling why more plausible generic pharmaceutical companies who have the requisite capabilities have not as yet been awarded such loan contracts.

Kodak is no stranger to controversy, having announced a few years ago in 2017 an intention to launch a Kodak Coin/blockchain enterprise, so riding upon the vogue at that time that also momentarily boosted its share price significantly.

This week on the 29th Kodak rocketed to an intraday high of $60.00

On Thursday 30th it closed at $29.83

Translated into market capitalization, from a not insubstantial $100 million+ at the start of the week to $3 billion and now trading just days later at under $1.5 billion!

We reprint below the exact announcement so as not to create any misleading information or content.

Investors should exercise extreme caution before investing.

ROCHESTER, New York – At the direction of President Donald J. Trump, U.S. International Development Finance Corporation (DFC) Chief Executive Officer Adam Boehler will today sign a letter of interest (LOI) to provide a $765 million loan to Eastman Kodak Company (Kodak) to support the launch of Kodak Pharmaceuticals, a new arm of the company that will produce critical pharmaceutical components. The project would mark the first use of new authority delegated by President Trump’s recent executive order that enables DFC and the U.S. Department of Defense (DOD) to collaborate in support of the domestic response to COVID-19 under the Defense Production Act (DPA).

"Addressing the unprecedented challenges we face today—and preparing for future crises—requires innovative ideas and partnerships,” said Boehler. “Today, we are bringing together the significant resources and expertise of the private sector and the U.S. Government. We are pleased to support Kodak in this bold new venture. Our collaboration with this iconic American company will promote health and safety at home and around the world.”

“Kodak is proud to be a part of strengthening America’s self-sufficiency in producing the key pharmaceutical ingredients we need to keep our citizens safe,” said Kodak Executive Chairman Jim Continenza. “By leveraging our vast infrastructure, deep expertise in chemicals manufacturing, and heritage of innovation and quality, Kodak will play a critical role in the return of a reliable American pharmaceutical supply chain.”

“If we have learned anything from the global pandemic, it is that Americans are dangerously dependent on foreign supply chains for their essential medicines,” said Assistant to the President and Director of the Office of Trade and Manufacturing Policy at the White House Dr. Peter Navarro. “This DFC-Kodak partnership is a big win for the use of President Trump’s DPA powers, a big win for New York, and a huge step forward towards American pharmaceutical independence.”

"This is about assuring our supply chains now and, in the future,” said Rear Admiral John Polowczyk, White House Supply Chain Task Force Lead. “Kodak is stepping up to help onshore pharmaceutical production, and this DPA action will allow the modernized Strategic National Stockpile to have domestic resiliency. Once Kodak ramps up, we will have the ability to tap into that capacity for domestic use."

Boehler and Continenza will sign the LOI and be joined by Navarro, Polowczyk, and Deputy Secretary of Defense David Norquist. The signing ceremony will follow recorded remarks from President Trump and New York Governor Andrew Cuomo.

Since George Eastman put the first simple camera into the hands of consumers in 1888, Rochester, New York-based Kodak has become a globally recognized American brand that has helped lead the innovation of the graphic communications industry. Today, Kodak is expanding its traditional product line to support the national response to COVID-19 by bolstering domestic production and supply chains of critical strategic resources.

Kodak Pharmaceuticals will produce critical pharmaceutical components that have been identified as essential but have lapsed into chronic national shortage, as defined by the Food and Drug Administration (FDA). Although Americans consume approximately 40 percent of the world’s supply of bulk components used to produce generic pharmaceutics, only 10 percent of these materials are manufactured in the United States.

DFC’s loan will accelerate Kodak’s time to market by supporting startup costs needed to repurpose and expand the company’s existing facilities in Rochester, New York, and St. Paul, Minnesota, including by incorporating continuous manufacturing and advanced technology capabilities. The LOI that will be signed today indicates Kodak’s successful completion of DFC’s initial screening and will be followed by standard due diligence conducted by the agency before financing is formally committed.

Once fully operational, Kodak Pharmaceuticals will have the capacity to produce up to 25 percent of active pharmaceutical ingredients used in non-biologic, non-antibacterial, generic pharmaceuticals while supporting 360 direct jobs and an additional 1,200 indirectly. The company plans to coordinate closely with the Administration and pharmaceutical manufacturers to identify and prioritize components that are most critical to the American people and U.S. national security.

Signed by President Trump on May 14, Executive Order 13922 delegates authority to the DFC CEO under the DPA to leverage its financial tools to re-shore production of strategic resources and strengthen related domestic supply chains in response to COVID-19. This authority is carried out in close partnership and coordination with DOD, which bears all costs of DFC’s DPA program. DFC recently launched a request for proposals from private sector entities seeking financing under the DPA for projects that support the domestic production or distribution of pharmaceuticals, personal protective equipment (PPE), medical testing supplies, vaccines, ventilation equipment, or relevant ancillary materials and technologies. Visit dfc.gov/dpa to learn more.

These efforts complement DFC’s global response to both the health-related and economic impacts of COVID-19. The agency recently announced a call for proposals under its new Health and Prosperity Initiative, which seeks to catalyze $5 billion of investment in projects that help developing countries respond to COVID-19 and build greater health resilience. Under the initiative, DFC is mainly focused on investments in health system capacity, including supply chains that expand the distribution of diagnostics, therapeutics, vaccines, and other medical supplies, products, and equipment.