Shares of Eastman Kodak (NYSE: KODK) More than three times on Tuesday, the news company will receive a $ 765 million loan from the US government to produce pharmaceutical components related to the American coronovirus.
Eastman Kodak will use the funds to launch Kodak Pharmaceuticals, a new division that will produce pharmaceutical ingredients deemed important by the US Department of Defense (DOD) and the Food and Drug Administration (FDA). Funds will be released by the US International Development Finance Corporation (DFC) under the Defense Production Act (DPA) under the direction of President Donald Trump.
The move aims to increase the country’s stock of drugs that are in short supply during the coronovirus epidemic, as well as reduce the country’s dependence on foreign manufacturers. “This is about assuring our supply chains now and in the future,” said John Polowski, lead of the White House Supply Chain Task Force.
The money will serve as a lifeline for Kodak, which has struggled to adapt to change for digital photography. Once a titan of American industry, Kodak was forced to go bankrupt in 2012. It emerged from bankruptcy in late 2013 with a renewed focus on commercial printing, but its share price would fall more than 85% before today. Even after today’s gains, Kodak’s stock is down 60% since it occupied the public markets.
The $ 765 million loan and supply agreement with the US government is certainly a game-changer for Kodak, whose market capitalization was only $ 115 million before today. With its market cap exceeding $ 230 million on the news, investors are expecting the deal to be a major new driver of revenue and profit growth for the company.