Markets

Kodak executive chairman addresses jump in trading activity before government deal was announced

Key Points
  • Trading activity picked up in shares of Eastman Kodak before the company announced that it had been tapped by the Trump administration to manufacture drug ingredients, data from FactSet shows.
  • On Monday, prior to the announcement, 1,645,719 shares traded hands in the stock, far surpassing Friday's 74,893 trades, and Thursday's 80,840 trades.
  • "I mean obviously this has been a pretty tight kept secret even until the last day," Executive Chairman James Continenza said Wednesday on "Squawk Box."
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Eastman Kodak CEO James Continenza on shift to drug production

Trading activity picked up in shares of Eastman Kodak before the company announced on Tuesday that it had been tapped by the Trump administration to manufacture drug ingredients, data from FactSet shows.

On Monday, 1,645,719 shares traded hands, far surpassing Friday's 74,893 trades, and Thursday's 80,840 trades. Not including this week, over the last year the average daily trading volume has been 236,479, according to FactSet.

The stock soared more than 200% on Tuesday after the company said it had been awarded a $765 million loan to start producing drug ingredients under the Defense Production Act. On Tuesday more than 284 million shares traded hands.

The buying activity continued into Wednesday, with the stock at one point surging more than 500% as retail investors, among others, piled into the name. As the stock bounced around, shares were halted for volatility more than 15 times. Kodak wound up closing 318% higher for its best day on record.

"We feel very comfortable that we're going to get to the end game," James Continenza, Eastman Kodak executive chairman, said Wednesday on CNBC's "Squawk Box." "We signed a letter of interest and we've been working on this for a few months. We feel very comfortable," he added.

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Kodak CEO: We need to have these pharmaceuticals here, we need to protect our people

Continenza said the initial high-level talks started two months ago. He added that the company has been involved in chemistry for more than 100 years, and so when the pandemic took hold earlier this year the company began making hand sanitizer and face shields, among other things.

Amid Monday's heavy trading activity, the stock jumped 24.76%. When asked if the heavy volume ahead of the announcement indicated that the deal was leaked, Continenza said he didn't know.

"I mean obviously this has been a pretty tight kept secret even until the last day," he said. "I couldn't tell you what influenced that [the volume] or didn't ... we knew for over a week."

Filings with the Security and Exchange Commission show that on June 23 Continenza purchased roughly 46,700 additional shares. On the same date, board member Philippe Katz purchased 5,000 shares.

- CNBC's Yun Li contributed reporting.

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