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The Australian sharemarket emerged from August reporting season deflated by a mildly disappointing month of profit results, and undermined by heavy losses in big names like Telstra and Commonwealth Bank.
Thursday's solid gain of 45 points, or 0.8 per cent, in the S&P/ASX 200 index to 5715 managed to trim the month's losses to only 6 points. Telstra's 10.5 per cent share price plunge over the month, more or less what it lost on the day it announced a hefty cut to its dividend, and CBA's 9.5 per cent fall amid ramping regulatory pressure around its money laundering compliance failures dragged on the bourse.
Those losses were offset by strong monthly gains from the major miners BHP, Rio Tinto and Newcrest Mining, while Wesfarmers also buoyed the market.
Morgan Stanley equity strategists branded results season overall "a subdued affair". Aggregate growth in earnings per share for the top 200 "is on track to sink to circa 5 per cent with no meaningful growth pick-up expected in outer years," they said.
It wasn't all gloom, with energy stocks the best performing segment of the sharemarket over the month, adding 5 per cent after a litany of well received earnings results following a tough period for the sector. That outperformance was slightly tarnished on Thursday, as oil and gas stocks were the only corner of the market to slide.
"One of the themes that led into this results season was that was that the retail environment was very shaky and that discounting was a big part of that," Pengana Capital fund manager Ed Prendergast said. "That's been borne out definitely," Mr Prendergast said, although "there were odd retailers like Adairs that did well in that environment anyway".
The contrasting fortunes of the retail sector were on display on Thursday, as accessories and clothing retailer Oroton Group surged 8.2 per cent and Harvey Norman plunged 7.5 per cent after revealing annual earnings that disappointed investors.
Aggressive non-bank lender Pepper Money has slashed mortgage and legal fees worth more than $1800 as competition for market share hots up.
Pepper's move comes ahead of the countdown to Springtime property sales, which remains the hottest time for deals despite regulatory attempts to cool the market.
Lenders are lowering rates, raising loan-to-value ratios, waiving fees and launching lucrative promotional offers in a bid to attract lower-risk property buyers, which are typically those with a big deposit, regular income, good credit record and wanting a principal and interest loan.
Westpac Group, which includes Bank of Melbourne, St George and BankSA, has announced it is cutting rates by up to 85 basis points on special promotions and reducing fees on some products.
Others, such as Australia and New Zealand Banking Group, are targeting specific buyers, such as qualified medical practitioners, looking for interest-only investment loans, or wanting to top-up existing interest-only investment loans, by halving deposits to 10 per cent.
Lenders are attempting to balance the need to boost profits and build market share in a key market with regulatory speed limits on growth, particularly for higher risk interest-only products.
Latest analysis by the Australian Prudential Regulation Authority shows while interest-only lending and loans to investors have slowed, owner-occupier loans continue to grow briskly.
Speaking of Harvey, Ardent Leisure has closed five leisure centres in Houston due to the tropical storm that has killed at least 23 people across the southern states of the US and is assessing a further three for any damage, the entertainment company said.
Three of the Main Event Entertainment centres were expected to open within seven days, the fourth could take up to two months to reopen and it was not possible to say when the fifth centre would reopen, Ardent said in a statement this morning.
It expected property and business insurance to cover costs and loss of earnings.
The closure and damage to its leisure centres caused by the now-downgraded former hurricane that has affected more than 48,700 homes in Texas will increase attention on Ardent's strategy for its 37-centre US division – the largest by earnings in its stable – at Monday's crucial shareholder meeting to vote on new directors.
Ardent's strategy is to cluster its US entertainment centres around Texas, a strategy previously criticised by some analysts as risky. Tropical storm Harvey is likely to strengthen that criticism. ​
Ardent chief executive Simon Kelly said the tropical storm would not change the company's plans.
"I don't for a second think this will undermine the integrity of the cluster strategy," Mr Kelly told The Australian Financial Review. "This is a once in a more than 150-year outcome. So I think that's a fairly long bow to draw in terms of having concerns about the clustering strategy. I think there are many benefits of the clustering strategy which over time would far outweigh the risks of that strategy."
Ardent shares are 0.1 per cent lower at $1.93.
Treasurer Scott Morrison said today that banking regulation can be used by incumbents to limit competition and the government wants to "recalibrate" settings in order to empower customers and introduce more competitive tension into the sector.
"Complexity and inertia in highly regulated markets is business's profits best friend, and often the consumer's worst nightmare," Mr Morrison said at a Bloomberg event on Thursday morning.
Echoing recent comments by former Treasurer Peter Costello, who described the banking sector as a "quadropoly" with profits driven by "a unique and privileged regulatory system", Mr Morrison said banks "have been built on regulation, frankly."
"And over time, large businesses who live in and depend on the regulatory environment can get very good at seeing those regulations work to their advantage and the balance between those businesses and customers can get out of whack," Mr Morrison said.
The comments come after the government asked the Australian Prudential Regulation Authority to make it easier for new banks to get licenses. Requirements attached to bank licenses such as minimum levels of regulatory capital are examples of regulations that act as a barrier to entry for new players, protecting the market share of incumbent banks.
Mr Morrison sought to reassure banks the government had no intention to lift the controversial bank tax introduced in the federal budget, saying "we set it at the level we thought it should be set at".
He also acknowledged the importance to the banking sector of the government maintaining its AAA credit rating.
Gasoline prices hit $2 a gallon for the first time since 2015 today as flooding from storm Harvey knocked out almost a quarter of US refineries, while crude prices stabilised following a slump the previous day.
Harvey has battered the US Gulf coast since last Friday, ripping through Texas and Louisiana at the heart of the US petroleum industry.
At least 4.4 million barrels per day of refining capacity was offline, or almost a quarter of total US capacity, based on company reports and Reuters estimates.
Amid fears of a supply squeeze, US gasoline prices today jumped to $2 per gallon for the first time since July 2015.
"The flooding from Hurricane Harvey shut the largest refinery in the US , pushing gasoline prices to a two-year high. In contrast, oil prices retreated," ANZ bank said.
Goldman Sachs said it could take several months before all production could be brought back online.
"While no two natural disasters are similar, the precedent of Rita-Katrina would suggests that 10 per cent of the ... currently offline capacity could remain unavailable for several months," the bank said.
Crude prices stabilised after falling sharply the previous day as the closure of so many US refineries has resulted in a slump in demand for the most important feedstock for the petroleum industry.
US West Texas Intermediate crude futures were trading at $45.96 per barrel, flat from the last day's settlement, when prices fell by 0.8 percent intraday. International Brent crude was at $50.88 a barrel, also virtually flat from its last close, though the contract fell by over 2 percent during the previous session.
Meteorologists said that Harvey could be the worst storm in US history in terms of financial cost.
"The economy's impact, by the time its total destruction is completed, will approach $160 billion," said Joel N. Myers, president and chairman of meteorological firm AccuWeather. Other estimates have put the economic losses from Harvey at under $100 billion.
Orocobre shares are on a tear today. surging 10.1 per cent to $3.72 after it swung to a net profit and said it expects production to increase this financial year.
The lithium producer said that the average price it received across all of its products improved to consistent contract pricing of above $10,000/ton.
In addition, firming prices are expected to be supported going forward as new production faces "significant headwinds", and forecast additions to supply are being over-estimated, the company said.
Orocobre swung to a net profit of $19.4m in the year to June 30, from a $22m net loss in the comparable period.
It produced 11,862 tons of lithium carbonate at its Olaroz plant in Argentina over the period, or around 5% to 6% of global supply in fiscal 2017. It's forecasting output of 14,000 tons in FY18.
Orocobre has been a stock of extremes – one that has lured wildly bullish speculators betting on a future of electric cars and battery power, but also one that has attracted equally feverish scepticism about the management, the project and the outlook for lithium.
The lithium play had been one of the hottest stocks in the market in 2016, but the back end of the year and 2017 has left investors frustrated, and furious.
By May, Orocobre was the single most shorted stock on the entire ASX and by some distance – with more than 20 per cent of the shares are loaned out to those betting that it would fail to deliver on its promise.
Here's Financial Times columnist Ed Luce on Donald Trump:
It is often tempting to think Donald Trump can do no worse. Yet he keeps finding that extra mile.
America's president began the holiday season with a threat of nuclear strikes on North Korea. This week Pyongyang launched its most ominous missile test in years. In between, Mr Trump gave a rocket boost to the Ku Klux Klan and pardoned America's most racist sheriff in memory.
Thankfully August is ending. Alas, September is likely to be worse. Then comes October. Nobody - least of all Mr Trump - can halt the disintegration of what we still politely call his administration.
The deeper that special counsel Robert Mueller's Russia probe goes, the greater Mr Trump's temptation to scapegoat his staff and trigger outrageous diversions.
It is impossible to run a stable administration amid mutual suspicion and mounting legal bills. Public servants, such as John Kelly, Mr Trump's chief of staff, will do their best to impose order on the White House. Like Sisyphus, their exertions will prove fruitless.
Others, such as Rex Tillerson, Mr Trump's secretary of state, may conclude it is no longer worth the humiliation. Mr Trump could equally arrive at the same conclusion on their behalf. No official can for long survive proximity to this president.
Mr Trump's decision to pardon former Arizona sheriff Joe Arpaio, who was convicted for defying a court order over racial profiling, gives a nasty foretaste of what the president is capable of doing when cornered. It offers two critical pointers.
The first is that Mr Trump has cast his lot with the white nationalists. Most people had grasped that already. But Mr Trump's embrace of nativism gets more intimate as the dance wears on.
The second troubling pointer is that Mr Trump is finding it ever easier to break the spirit of the law. Having issued one unforgivable pardon, it will be easier to do so again. Constitutional lawyers say presidents cannot pardon themselves.
Bank of America is confident clients will pay as much as $US80,000 per user for its research after a European ban on free content goes into effect, chief executive officer Brian Moynihan said.
"I'm sure that people will pay us for that," Moynihan said Wednesday in an interview. They'll pay up "because that's how they're going to have to get it".
Investment banks are in talks with money-manager clients over how to charge them for research once new European Union regulations known as MiFID II ban the free distribution of analyst notes and other services, starting next year.
The Markets in Financial Instruments Directive requires money managers to separate the trading commissions they pay from investment-research fees.
Bank of America, based in Charlotte, North Carolina, will provide a premium package that includes speaking directly to analysts, attending conferences and meeting senior executives of major companies and policy makers, according to an offer sent to clients earlier this month.
Customers opting for the premium offer will pay from $US15,000 to $US80,000 depending on how much they tap those services.
In the wide-ranging interview, Moynihan also said third-quarter trading results were "solid", though he declined to forecast whether revenue will increase from last year.
"You have to remember the whole quarter is made in September, so we've got a while to go," Moynihan said. "It's OK."
Moynihan repeated an appeal he first made just days into Donald Trump's presidency that Washington should focus on reforming the US tax code. He said Wednesday that efforts to rewrite tax policies — for both businesses and individuals — have more support than other priorities of the Trump administration.
"Of all the issues that have come up so far, this one has more of a unified group of people that are saying, 'We've got to do this. It's so obvious we're not competitive,'" he said.
Future Fund chairman Peter Costello has hinted the sovereign wealth fund could possibly start managing money on behalf of superannuation funds.
While ruling out managing retirement savings directly, Mr Costello said that if a super fund wanted the Future Fund to manage some of its money, that could be possible.
However, he said that the money would have to be managed separately as the Future Fund is "legally a sovereign fund and, therefore, we cannot mix private monies into it".
Mr Costello made the comments while announcing the Future Fund produced a 8.7 per cent return for the year to June 30, 2017.
For the past 10 years, which is almost the life of the fund, it is has produced an average annual compound return of 7.9 per cent.
Over the same period, balanced investment options - the options that most workers have their super with - returned less than 6 per cent.
"The Future Fund continues to perform well and has exceeded its benchmark return objective," Mr Costello said.
"Investment returns have added over $73 billion to the original contributions from government of $60.5 billion," the former federal treasurer and current chairman of Nine Entertainment, said.
The government recently lowered the fund's return objective to inflation plus 4 percentage points, a reduction of half-a-point, to reflect low interest rates around the world.
It has also said that it will not withdraw money from the fund for the next 10 years.
Mr Costello said that would allow the fund to be able to pay all of the unfunded liabilities of federal public servants. He added that the fund would still likely have assets for the remainder of this century.
"I would be very confident that if there is no drawdown before 2026 the assets of the Future Fund would be sufficient to meet any unfunded liabilities for the century," he said.
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The ASX has regained the 5,700 mark, with the benchmark higher by 35 points, or 0.6 per cent, to trade at 5705 at around midday.
Broadly, banks and miners are still driving the gains as BHP Billiton climbs 1.7 per cent, ANZ rises 1.0 per cent, CBA is 0.5 per cent higher, Westpac is up 0.7 per cent and Rio Tinto is advancing 1.7 per cent.
Retailers are some of the big movers in today's session after updating on results, with Harvey Norman dropping a hefty 6.7 per cent and OrotonGroup soaring 8.2 per cent.
Webjet shares are climbing 6.4 per cent and NextDC shares are up 6.1 per cent on the last day of earnings season.
The Australian dollar is trading at US78.94 cents against the greenback, or 0.1 per cent lower, as investors parse some local data on capital expenditure and PMI figures from China.
Here's some more economic data, this time on the Australian economy:
Business spending on new equipment plant and machinery rose for a second straight quarter, with a bigger-than-anticipated upgrade in future spending plans raising hopes a long investment strike is gradually coming to an end.
Total capital expenditure rose 0.8 per cent in the June quarter from the previous three months, when it rose by 0.9 per cent, the Australian Bureau of Statistics reported.
Companies also dramatically ramped up their forecast for planned investment spending in 2017-18, boosting it from three months ago by 17.6 per cent to $101.8 billion.
Economists surveyed by Bloomberg forecast a 0.2 per cent rise in second-quarter capital expenditure. They also predicted the third estimate for the current financial year would be for investment of $95.9 billion.
The official capex data only captures around 60 per cent of business investment recorded in the national accounts as they don't include the booming sectors of agriculture, health and education.
However the latest data will support the Reserve Bank of Australia and Treasury view that business investment outside of the mining sector is set to pick up steam.
Companies are enjoying some of the most advantageous business conditions in almost a decade, with lower wages growth and lower currency, alongside cheap and plentiful credit, spurring national competitiveness.
Three months ago businesses estimated that their capex spend in 2017-18 would be $85.4 billion, which included a 30 per cent drop in mining investment and no lift in non-mining.
That figure has been upgraded to more than $100 billion, thanks largely to a 19.4 per cent boost in spending plans among service companies, which now expect to outlay $61.4 billion in the current financial year.
Growth in China's manufacturing sector unexpectedly accelerated in August, defying expectations that the world's second-largest economy will start to cool as borrowing costs rise and regulators clamp down on riskier lending.
The official Purchasing Managers' Index (PMI) released today stood at 51.7 in August, the China Logistics Information Center said on its website.
That was up from the previous month's 51.4 and well above the 50-point mark that separates growth from contraction on a monthly basis.
Analysts surveyed by Reuters had forecast the reading would come in at 51.3, easing only marginally from July.
Meanwhile, growth in China's services sector slowed in August, hitting the lowest level since May 2016, an official survey showed today.
The official non-manufacturing Purchasing Managers' Index fell to 53.4, from 54.5 in July, raising fresh questions about the health of China's services sector.
The services sector accounts for over half of China's economy, with rising wages giving Chinese consumers the opportunity to shop and travel more.
China's leaders are counting on growth in services and consumption to rebalance their economic growth model from its heavy reliance on investment and exports.
China posted stronger-than-expected economic growth of 6.9 percent in the first half, fuelled by a year-long construction boom, resurgent exports and robust retail sales.
But economists have expected the pace to slow slightly in the second half due to higher financing costs, a regulatory clampdown on riskier lending and some signs of moderation in the red-hot housing market.
The Australian dollar was trading at US79.06 cents after the data.
Harvey Norman's net profit soared 29 per cent to a record $448.9 million in 2017 as Australia's largest furniture and homewares retailer rode the last tailwinds of the housing and property booms.
The bottom line result, which exceeded the last record result of $413 million in 2007, was augmented by property revaluations of $108.5 million, more than double the $48 million of property revaluations booked in 2016.
Underlying net profit excluding properly revaluations and asset impairments rose 15.7 per cent to $390.8 million, beating consensus forecasts around $385 million.
"To say that we're pleased by the record-breaking results we are presenting today would indeed be an understatement," said chairman Gerry Harvey.
"The results for the year ended 30 June 2017 are truly unprecedented in our 30-year history."
The result was underpinned by strong growth in Harvey Norman's franchised operations in Australia and company-owned stores overseas.
Despite the strong growth, Harvey Norman cut its final dividend by 5¢ to a fully-franked 12¢ a share, payable December 1. The final dividend took the full year payout to 26¢ compared with 30¢ in 2016.
Mr Harvey said the board was undertaking a review of the company's capital management options, including a possible share buy-back, and continued to consider investment options for the core business.
While aggregated sales rose 5.1 per cent to $7.27 billion over the year, same-store sales growth slowed in Australia and in most other territories in the fourth quarter.
Harvey Norman is one of the most shorted stocks on the ASX, with the level of shares sold short rising from 3.7 per cent in March to 10.1 per cent this month, according to shortman.com.au. This represents about 20 per cent of the free float.
Harvey Norman shares have fallen 16 per cent this year due to concerns about Amazon and an Australian Securities and Investments Commission review of Harvey Norman 2016 books.
Shares are down 4.7 per cent.
Webjet reported late yesterday and the chief executive of the online travel group, John Guscic, said he sees no sign of demand for travel slowing down.
The company posted a record statutory profit of $52.4 million for 2016-17, up 146.6 per cent.
The statutory profit factors in a $28 million windfall from the disposal of Asia-focused online travel agent brand Zuji. But profit from continuing operations was still up 58 per cent, at $33.1 million. Statutory revenues grew 41.5 per cent to $218.7 million.
The number could have been even higher had Webjet not had a dispute with its auditor, BDO, over its accounting treatment of an agreement with Thomas Cook Travel to supply it with hotel inventory.
Despite two top-tier accounting firms agreeing with Webjet's original treatment, Mr Guscic's leadership team eventually decided to accept BDO's verdict, despite it slicing $11.5 million off 2016-17 earnings.
"[We are] better engaged in focusing on executing our growth strategy ... without the distraction of a protracted debate over a technical accounting matter that has no bearing on future cash flows or the economics of the Thomas Cook agreement," Mr Guscic said.
"We've learnt from this that there are still plenty of shades of grey when it comes to accounting treatments."
Central to Webjet's growth strategy is its acquisition last month of Jactravel. The company raised $165 million to fund a deal which makes the Australian business the world's second largest wholesaler of online hotel inventory.
The biggest is Spain's Hotelbeds, which is based on the same Palma de Mallorca street as Webjet's biggest brand in the wholesaling space prior to the Jactravel acquisition, Sunhotels.
Webjet's growth has continued into 2017-18, with Mr Guscic claiming the core Webjet business was up 20 per cent year-on-year in revenue terms so far.
Shares are higher by 4.9 per cent today.
OrotonGroup shares are climbing today, up a hefty 11 per cent in early trading.
The firm's decision to close the loss-making Gap business will cost the accessories and clothing retailer at least $5 million before lease exit costs.
In a trading update on Thursday, OrotonGroup confirmed that underlying earnings before interest, tax depreciation and amortisation, before one-off costs, would come in at the upper end of its previous guidance range of $2 million to $3 million.
This compares with underlying EBITDA of $12.9 million in 2016 and includes about $2.6 million in operating losses at Gap, but does not include about $1.3 million in one-off costs related to the acquisition of accessories business The Daily Edited, a payout to former chief executive Mark Newman and an ongoing strategic review or Gap closure costs.
OrotonGroup said the impact of the closure of Gap on the 2017 results was still being determined but at this stage the retailer expected to incur additional costs around $5 million, including a non-cash impairment charge around $3.3 million and other related exit costs of $1.7 million.
These costs do not include any Gap lease exit costs, which are subject to ongoing discussions with lessors.
It is also reviewing the carrying value of other assets as part of a strategic review, which is assessing options including a sale of the business, recapitalisation or refinancing of debt facilities.
OrotonGroup said trading in the first four weeks of 2018 had been positive, with like for like sales across the Oroton business exceeding those in the first four weeks of 2017.
Telstra is in a yield sweet spot, but it's not clear that is enough, The AFR's Chanticleer columnist, Tony Boyd, writes:
As a former chief executive of Telstra, Ziggy Switkowski, who is chairman of NBN Co, must have felt some sympathy for Telstra CEO Andy Penn this week when he killed Telstra's $5.5 billion pull forward of future NBN receipts.
The only upside is that Telstra is now in the sweet spot for yield hungry investors. Its fully franked dividend yield is now about three times the level of the highest six-month term deposit.
When you combine Wednesday's closing price for Telstra of $3.60 and its forecast 2018 dividend of 22¢ a share you get a dividend yield of 6.11 per cent. Gross that up for dividend imputation credits and the yield is 8.7 per cent.
That is better than any grossed up yield from the four major banks with the exception of NAB which has a gross up yield of 9.7 per cent.
It is ironic that many of the retail investors who have worn the pain of a 44 per cent plunge in the Telstra share price since 2015 are now among the biggest sellers of the stock. That is evident from its position in the top echelon of trades on the ASX.
Selling Telstra shares out of frustration over its cut in dividends will only leave the problem of where to put the money. It is hard to find a higher yield stock.
The only caveat to that analysis is that Telstra's dividend paying ability will be heavily influenced by Penn's success in replacing $3 billion in earnings lost because of the migration of customers from Telstra's network to NBN Co.
It is quite possible that dividends will slip to as low as 15¢ a share by 2020.
Penn says he wants to make Telstra a global technology giant. But based on the evidence presented at the latest profit results in the middle of August, this will be a long slow process.
Shares are perking up a bit on the last day of the month, after gains for European and US stocks set the stage for an advance in the Australian market.
The benchmark S&P/ASX 200 index is higher by 18 points, or 0.3 per cent to 5688 in early trading, helped by gains from banks with Westpac shares up 0.9 per cent, CBA up 0.6 per cent and NAB and ANZ up 0.8 per cent.
Miners were also stronger, with BHP Billiton higher by 1 per cent.
Of the day's earnings-related movers, Orocobre is climbing 10 per cent, Macquarie Atlas is up 1.8 per cent and Webjet is higher by 5.4 per cent after reporting late yesterday. Harvey Norman shares are down 1.5 per cent.
Elsewhere Telstra is extending yesterday's sharp drop with a 0.1 per cent decline while McGrath shares climbed 0.7 per cent.
Sandfire shares jumped 2.9 per cent after a broker upgrade and Ramsay Health is down 3.4 per cent after a downgrade while Blackmores is down 2.7 per cent after it was also downgraded.
Macquarie Atlas Roads said it had appointed advisers to assess investment opportunities and "strategic issues" like internalising management as the tollroad group reported a 5 per cent rise in proportionate interim earnings to $294.8 million.
Macquarie Atlas pays management fees to Macquarie, which owns about 12 per cent of the tollroad company.
Macquarie Atlas said on Thursday that it was assessing whether the current structure, including the relationship with external manager Macquarie, was in "the best interests" of shareholders.
"To date, the directors have taken an informed view that this structure has been to security holders' benefit.
"The Macquarie Atlas boards have now appointed Adara Partners and King & Wood Mallesons to provide independent advice to assist them in forming their views on a variety of matters including investment opportunities and strategic issues."
The company has been under pressure from shareholders to internalise management to avoid paying Macquarie hefty management and performance fees, which have totalled about $300 million over five years. It recognised a performance fee of $8 million for the year ended June 30.
It also has a complicated stapled structure with boards in Bermuda and Australia.
Macquarie Atlas reported a statutory net profit for the six months to June of A$437.6 million, up from $54 million a year earlier, as it benefited from a revaluation gain of $375.6 million after the acquisition of an additional 50 per cent interest in US tollroad Dulles Greenway and earnings from 20.1 per cent stake in European tollroad Autoroutes Paris-Rhin-Rhone (APRR).
Macquarie Atlas's group interim proportionate EBITDA rose 4.9 per cent to $294.8 million, while proportionate revenue increased 3.6 per cent to $387.3 million on stronger traffic and higher toll fares. Traffic across the company's tollroads grew 2.6 per cent.
Macquarie Atlas confirmed its second half dividend guidance of 10¢ per share, and has forecast a full year dividend of 20¢, up 11.1 per cent on a year earlier.
CBS' shock bid for Network Ten, which gazumped Lachlan Murdoch and Bruce Gordon, values the free-to-air broadcaster at $500 million at least.
A report on the state of Ten's finances in administration and the sale process is expected to be given to creditors on Thursday.
The United States media giant put in a claim for $795.5 million after Ten went into administration, making it the Australian broadcaster's largest creditor.
However, in assessing the claim, the value of CBS' debt was brought down to $350 million, to reflect the fact the US studio could sell its content, which was the basis for the large majority of its claim, elsewhere.
CBS will not attempt to claim any of its debt – it is an unsecured creditor. The debt, combined with payments to secured creditors, amounts to $490 million.
Other unsecured creditors will also receive payments based on an assessment on the value of their debt, and it's believed that would take Ten's valuation over $500 million.
The cash payment CBS makes for Ten is expected to be much lower than $500 million, factoring in its $350 million claim.
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