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## Partial Sale of Interest in Bristol Water 

On May 10, 2012, Capstone sold a 20% indirect interest in Bristol Water plc to I-Environment Investments Ltd, a subsidiary of ITOCHU Corporation. I-Environment Investments Ltd acquired a 2/7ths ownership interest in CSE Water UK Limited, which indirectly owns a 70% interest in Bristol Water plc. Capstone received $68,952 of net proceeds on sale and used the funds to repay the remaining $28,975 on the senior debt facility and $39,000 on the CPC-Cardinal credit facility, retaining cash of $977. 

Following this sale, Capstone retained a 50% beneficial interest in Bristol Water and continues to consolidate based on retention of control. Capstone recorded the transaction as a transfer of equity to non-controlling interest holders as follows: 

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In addition, the portion of cumulative differences on translation related to Bristol Water has been adjusted to the non-controlling interest acquired by ITOCHU Corporation as follows: 

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## NOTE 4. CASH AND CASHEQUIVALENTS AND RESTRICTED CASH 

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Restricted cash is primarily cash that is held by the Corporation's subsidiaries in support of segregated bank accounts to support debt service reserves, and/or operating and maintenance reserves in support of specific long-term debt, as well as, various letters of credit. 

## NOTE 5. SHORT-TERM DEPOSITS 

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For the year ended December 31, 2012, the effective interest rate on short-term cash deposits was 0.45% and these deposits had an average maturity date of 54 days. 

## NOTE 6. TRADE AND OTHER RECEIVABLES 

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