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Onsite Energy Corporation's Handling of Notes Payable

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Onsite Energy Corporation, an energy efficiency services company who develops, designs, constructs, owns and operates comprehensive energy efficiency projects including lighting retrofit systems, energy management systems, equipment upgrades, HVAC modification, high-efficiency motors, and cogeneration/small power systems announced that it raised approximately $1 million through the sale of long-term receivables (PR Newswire, 1997). Proceeds from the sale were used to repay approximately $400,000 in notes payable and the balance was used as working capital.

Also, Onsite completed the preliminary closing of the sale of its interests in Television City Cogen, L.P. ("TCC"). The sale will be paid in three increments and will ultimately provide Onsite with proceeds sufficient to retire virtually all of its outstanding notes payable, which will reduce monthly interest expense by approximately $17,000 and debt service payments by approximately $60,000 per month, subject to receipt of payments from the buyer in accordance with the purchase and sale agreement. Onsite previously announced that it expected to realize a gain on the sale of TCC of approximately $200, 000. As the transaction was finally structured, for accounting purposes, Onsite recognized a loss on the sale of TCC of approximately $450,000. It was anticipated that the loss will be recorded, along with an anticipated operating loss, in Onsite's third fiscal quarter ended March 31, 1997. It is Onsite's mission to be a premier provider of energy efficiency solutions for institutional, commercial and industrial customers (PR Newswire, 1997).

Companies can learn from this example, to effectively structure their long-term receivable (such as bonds) to meet immediate working capital and short-term financial needs such as but not limited to Notes Payable.

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YouSigma. (2008). “Onsite Energy Corporation's Handling of Notes Payable." From http://www.yousigma.com.

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