(CNBC) – Eastman Kodak Company KODK 1.25% is facing an inquiry from the United States International Development Finance Corp, the federal agency that planned to extend it a $765 million loan to manufacture drug ingredients, the Wall Street Journal reported Monday.
What Happened: The inspector general of the agency, responsible for extending loans to businesses affected by the COVID-19 pandemic, told Senator Elizabeth Warren (D-Calif.) last Thursday of his intent to review the loan deal, a spokesperson for Warren told the Journal.
The spokesperson said the inspector general was looking into why the Rochester, New York-headquartered company was selected for the loan and “whether Trump administration officials involved in the award had any conflicts of interest, and the impact of Kodak’s lobbying effort.”
Warren expressed gladness over the inspector general’s investigations of “this massive fiasco of a deal.”
Why It Matters: Administration officials had hailed the loan agreement in July with President Donald Trump calling it “one of the most important deals in the history of U.S. pharmaceutical industries,” the Journal noted.
The Kodak deal would have reportedly helped lessen U.S. reliance on China and India for the production of drugs and also help expedite their manufacturing.
The U.S. Securities and Exchange Commission is also looking into the loan deal’s disclosure, made on July 27, which caused the company’s shares to spike 25% on the day.
The DFC paused the process last month, while Kodak said it would carry out an internal investigation to review the deal.
Price Action: Kodak shares closed 1.4% higher at $6.50 on Monday.