Shares of Eastman Kodak Co fell about 40 percent on Monday and were on track for their worst single-day decline after the US government blocked a $765 million loan to the company, which was going to make drug ingredients for use in possible COVID-19 vaccines, because of "alleged wrongdoing" by executives.
The US International Development Finance Corp (DFC) was slated to grant the loan to Eastman Kodak, which is looking to move deeper into the pharmaceutical arena.
But alarms were raised after 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.
US President Donald Trump said last week the government would investigate the circumstances surrounding the announcement of the loan.
"Recent allegations of wrongdoing raise serious concerns," US International Development Finance Corp (DFC) said late on Friday in a tweet.
The company's shares have soared more than five-fold, with retail traders on the popular Robinhood trading app piling into the stock since DFC announced it would sign a letter of interest to provide the loan to the company.
More than 900 million shares have exchanged hands since the loan announcement, nearly 12 times the company's outstanding shares.
Shares of the company were down 39.50 percent at $9 in pre-market trading on Monday.