“This is as per an agreement for advance against commitment fee, which is to cover Glenmark's risks associated with upgrading its manufacturing facilities to meet Salix's anticipated increased requirements in demand for Crofelemer,” the pharmaceutical company said in a filing to the stock exchanges.
After remitting the advance of $15 million to Glenmark, Salix will pay Glenmark the remaining $6.6 million of commitment fees in five equal annual installments.
“Through an agreement between the two companies, Salix agreed to pay Glenmark a $21.6 million commitment fee in five equal annual installments, with the first annual installment in July 2012, in view of Glenmark's investment in and risks associated with upgrading its manufacturing facilities to increase the production capacity of crofelemer. The commitment fee is in addition to the compound purchase price payable by Salix to Glenmark,” it added.
The stock opened at Rs 331 and hit a high of Rs 351 on the NSE. A combined 1.93 million shares have changed hands on the counter till 0954 hours against an average around 700,000 shares traded daily in the past two weeks.