Kodak Board Member, Wife Donated $116M In Company Shares During Federal Drug Loan-Related Stock Surge

An Eastman Kodak Co. KODK board member and his wife donated nearly half their stock holding in the company, amounting to 3 million shares, to a religious charity on a day when the company’s stock hit its highest valuation since 2014, the Wall Street Journal reported Tuesday. 

What Happened

George Karfunkel and his wife Renee Karfunkel made the donation to New York-based Congregation Chemdas Yisroel on July 29, according to a filing with the United States Securities and Exchange Commission. 

The donation, thought to be the largest made to a religious organization based on a list maintained by the Chronicle of Philanthropy, is valued at about $116.3 million, based on the Kodak stock's average trading price of $38.75 per share on that day, with an intraday low of $17.5 and high of $60.

The New York charity’s registration filings indicate that the benefactor Kodak board member Karfunkel is also its president, as per the Journal. 

The donation has the potential to give the couple a tax break in the region of tens of millions of dollars. 

The company told the Journal it had retained the law firm Akin Gump Strauss Hauer & Feld to conduct an internal review and that the Karfunkels’ donation was within the ambit of that probe.

Why It Matters

The SEC is investigating events surrounding a July 27 announcement of Kodak receiving a $765 million federal loan for its foray into pharmaceuticals.

The announcement had caused the shares of the former photography giant to surge 25% on the same day.

The federal government has halted the loan until the company is cleared of allegations, which also extend to Kodak CEO Jim Continenza receiving options on $1.75 million shares a day before the disclosure of the loan.

Continenza backed the government’s move to suspend the loan at the company’s earnings call on Tuesday, the Journal reported separately.

The Rochester, New York-based company said that if the loan does not materialize, it still plans to continue its expansion into pharmaceuticals. 

Kodak on Tuesday reported a net loss of $5 million in the second quarter compared with net income of $201 million in the same period last year.

Price Action 

Kodak shares closed nearly 6.7% lower at $10.01 on Tuesday, but rose 4.4% in the after-hours.

Photo courtesy: Michael Tomczyk via Wikimedia