So in relation to CBS takeover of TEN. My understanding is "they are purchasing the company" is this correct?

Because I am struggling with getting my head around the procedure. For example, If I purchase a "company" here in Australia, I also purchase its assets and liabilities. So are CBS also purchasing our shares?

I received a letter from Link Market Services Limited
For and on behalf of the Deed Administrators to inform me CBS are applying through the Supreme court to have all shares transferred over to them. Part of this correspondence included a statement part of which:- "The explanatory statement includes in independent experts report prepared by KPMG corporate finance (IER) which values the equity in TEN.

The (IER) concludes that the equity in TEN is NIL !!!!!

How can it be NIL? How can it be legal?

  • From a very quick scan of some of the documents from the Australian Stock Exchange's page for TEN it would appear that TEN are in administration, and their shares are down to 16 cents each, so if they're not NIL yet, they're pretty close to it, and I would guess (though I'm no expert) the company would effectively be bankrupt and the shares worthless if it weren't for administration. If you've got shares in TEN, and it's still possible to sell, it might be a case of "get whatever you can" for them (but that isn't "advice"). – TripeHound Oct 13 '17 at 8:53

they are purchasing the company" is this correct?

Yes this is correct.

If I purchase a "company" here in Australia, I also purchase its assets and liabilities

Yes that is correct.

How can it be NIL? How can it be legal?

The value of shares [or shareholders] is Assets - liabilities. Generally a healthy company has Assets that are greater than its liabilities and hence the company has value and shareholders have value of the shares.

In case of TEN; the company has more liabilities; even after all assets are sold off; there is not enough money left out to pay all the creditors. Hence the company is in Administration. i.e. it is now being managed by Regulated Australian authority. The job of the administrator is to find out suitable buyers so that most of the creditors are paid off and if there is surplus pay off the shareholder or arrive at a suitable deal.

In case of TEN; the liabilities are so large that no one is ready to buy the company and the deal of CBS will also mean nothing gets paid to existing shareholders as the value is negative [as the company is separate legal entity, they can't recover the negative from shareholders]. Even the current creditors may not be paid in full and may get a pro-rated due and may lose some money.

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