As part of the shareholders' agreement, the exercise price of the warrants had been fixed at 66 per cent of the offer price made to the investors in the ADR float. As per the agreement, the warrants had a lock-in up to June 30, 2001 with a provision that they can be exercisable immediately if the company goes in for a listing.

The agreement provided that the conversion price of the warrants is equal to eight times the fully diluted earnings per share, as shown in the latest audited financial statements; provided that the exercise price may not be less than 66 per cent of the fair market value of an equity share on the exercise date. Since the company had a net loss in fiscal 1999, the exercise price would be 66 per cent of the fair market value, as determined by three merchant banks, of the underlying equity shares on the exercise date.

According to the company, both Satyam Computer Services and SARF have notified their intent to exercise the warrants, the exercise price for which will be equal to 66 per cent of the ADR price.

During its recent overseas float which culminated into listing of the Satyam Infoway ADRs at the Nasdaq, investors of both kinds-institutional as well as retail-had shown tremendous response to the offer. On the third day of the ADR road show itself, the company had to revise the offer price up to a maximum of $18 compared to the initial price band of $12 to $14. Against its final target amount of $75 million, the total book size was at a whopping $2 billion.