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Eastman Kodak Co.'s $765 million loan agreement with the U.S. government to produce pharmaceutical ingredients has been put on hold because of "recent allegations of wrongdoing," the U.S. International Development Finance Corp. (DFC) said.
Earlier this week, senior Democratic lawmakers asked federal regulators to investigate securities transactions made by the company and its executives around the time it learned it could receive the government loan.
"Recent allegations of wrongdoing raise serious concerns," DFC said late Friday in a tweet.
"We will not proceed any further unless these allegations are cleared," the DFC said. It was referring to a letter of interest it signed on July 28 with Kodak.
President Donald Trump on Tuesday said the government would investigate the circumstances surrounding the announcement of the loan, which will help the photographic equipment maker shift into making pharmaceuticals at its U.S. factories.
Kodak shares surged more than 1,000% last week after the loan was announced, generating a windfall for executives, some of whom had received options one day earlier.
Lawmakers said they had "serious concerns" about the transactions and asked the Securities and Exchange Commission to investigate the circumstances surrounding the matter. They cited growing concerns about insider trading.
The company said it had appointed a special committee of independent directors of its board to conduct an internal review.
"The internal review will be conducted for the committee by Akin Gump Strauss Hauer & Feld LLP," Eastman Kodak said in a statement.