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Greenlight Sustainability
Solution & Strategy Planning
Polaris
PwC Advisory Team
A detailed look at sustainability strategy and
environmental reputation reestablishment
Nov 2016
Current
Situation
Our Process Financial Impact
Short-Term
Initiatives
PWC Support
PwC @ Polaris 1
Current Situation
Problem: Greenlight tire waste discovered in Louisiana
wetlands1
Short-term goal: Restore public image2
Long-term goal: Embed environmental
concern into everyday operations3
PwC @ Polaris 2
80%
20%
80%
Complement with short-
term initiatives
Pay 20% cash
immediately
Purchase 80%
of RubberUp's StocksPay 80% over a four
year term
Our Solution
PwC @ Polaris 3
Current
Situation
Our Process Financial Impact
Short-Term
Initiatives
PWC Support
PwC @ Polaris 4
Decision Process
Cost-benefit Analysis
on Different options
Financing Method
Selection
PwC @ Polaris 5
Cost-Benefit Comparison
Picking the best option
PwC @ Polaris 6
Acquisition
Benefits:
- Quick
- Established technology,
infrastructure, and market
channels in place
- Enjoy sizable revenues and cash
flow, used for short-term
initiatives
- Vertical integration lower cost
- Two companies’ value matches
Costs:
- Human capital change
- $2.5M overall cost
Internal
Benefits:
- Flexible
- Continue to perfect Greenlight
Operating System(GO) on lean
six sigma principles
Costs:
- Time consuming
- Revenue not guaranteed
- Lack of pre-existing distribution
channels
- $2.5M cost
 Our decision involves purchasing 80% of RubberUp’s stock
 Financed with cash and with debts
Decision
PwC @ Polaris 7
Impacts
- Ensure minimum human capital change
- Guarantee revenue
- Steady cash flow can be devoted to research and
marketing campaigns
- Avoid multiple taxation compared to purchase lower
than 51%
- Lower cost compared to acquire 100%
- Protect shareholder’s benefit compared to stock
exchange purchase, we know value will go up
Current
Situation
Our Process Financial Impact
Short-Term
Initiatives
PWC Support
PwC @ Polaris 8
Balance Sheet Impact
 Consolidated balance
sheet
 Greenlight becomes
holding company
 RubberUp becomes
subsidiary
 Taxes are consolidated
 Synergistic effect
PwC @ Polaris 9
Tax Implications
State tax reliefs;
specifically Georgia and
Mississippi
Tax credits available from
the federal government
for sustainable
enterprises
Immediate claim to
depreciation on
RubberUp’s assets
PwC @ Polaris 10
Market Power
RubberUpGreenlight
After the acquisition of RubberUp, we expect the market power of the
consolidated company to be greater than before the acquisition.
Consolidated Company
PwC @ Polaris 11
Current
Situation
Our Process Financial Impact
Short-Term
Initiatives
PWC Support
PwC @ Polaris 12
Complementary MethodsTest Tube ShapesJoin Rubber
Manufacturer’s
Association
Launch a marketing
campaign
Support eco-friendly tire
projects
01
02
03
PwC @ Polaris 13
Rubber Manufacturer’s Association
Designed to ensure
environmental diligence with
their products
RMA Mission
- Tire-Derived Fuel
- Ground Rubber
- Applications
- Civil Engineering
Scrap Tire Market
PwC @ Polaris 14
MARKETING CAMPAIGN
“TIRE CRAFTSMAN”
• Tire Art
• Recording
• The Campaign Promo:
• Social networks
• Media
• Newspaper/magazines
PwC @ Polaris 15
Microscope Shape for PowerPoint
We recommend an
increase in funding from 3
to 5 percent for
degradable tire projects
Increase Research Funding
PwC @ Polaris 16
Current
Situation
Our Process Financial Impact
Short-Term
Initiatives
PWC Support
PwC @ Polaris 17
Ladder Infographics for PowerPoint05
04
03
02
01
Tax-free acquisition
Financing ratio analysis
Negotiation
Complete valuation of
RubberUp
Due diligence
PwC @ Polaris 18
Greenlight Sustainability
Solution & Strategy Planning
Polaris
Solution Specialist Team
A detailed look at sustainability strategy and
environmental reputation reestablishment
Nov 2016
Appendix
Forecasting
Appendix
Numbers in thousands
RubberUp Valuation: 2,800
Greenlight Valuation: 30,000
Projected Pro forma Impact
Net Sales 37,000
Net Income 6,200
Total Assets 20,000
Total Liabilities 13,000
Total Equity 7,200
All numbers are in thousand
Appendix
We arrived at the valuation of RubberUp by benchmarking its revenues and
headcounts with similar firms. To get the exact valuation, we found a firm, West
Coast Rubber Recylcing, Inc., with revenues of approximately $7 million and
headcounts of more than 40 employees. The valuation was at $2.8 million, which
we then used for our valuation of RubberUp.
Appendix
Federal depreciation allowance: 50% depreciation credit may be taken for
equipment and the machinery used for recycling within the first year the property
is in service.
Manufacturing tax credits: An income tax credit worth 5% of eligible businesses in
Mississippi on investments totaling over $1 million

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PWC Case Competition

  • 1. Greenlight Sustainability Solution & Strategy Planning Polaris PwC Advisory Team A detailed look at sustainability strategy and environmental reputation reestablishment Nov 2016
  • 2. Current Situation Our Process Financial Impact Short-Term Initiatives PWC Support PwC @ Polaris 1
  • 3. Current Situation Problem: Greenlight tire waste discovered in Louisiana wetlands1 Short-term goal: Restore public image2 Long-term goal: Embed environmental concern into everyday operations3 PwC @ Polaris 2
  • 4. 80% 20% 80% Complement with short- term initiatives Pay 20% cash immediately Purchase 80% of RubberUp's StocksPay 80% over a four year term Our Solution PwC @ Polaris 3
  • 5. Current Situation Our Process Financial Impact Short-Term Initiatives PWC Support PwC @ Polaris 4
  • 6. Decision Process Cost-benefit Analysis on Different options Financing Method Selection PwC @ Polaris 5
  • 7. Cost-Benefit Comparison Picking the best option PwC @ Polaris 6 Acquisition Benefits: - Quick - Established technology, infrastructure, and market channels in place - Enjoy sizable revenues and cash flow, used for short-term initiatives - Vertical integration lower cost - Two companies’ value matches Costs: - Human capital change - $2.5M overall cost Internal Benefits: - Flexible - Continue to perfect Greenlight Operating System(GO) on lean six sigma principles Costs: - Time consuming - Revenue not guaranteed - Lack of pre-existing distribution channels - $2.5M cost
  • 8.  Our decision involves purchasing 80% of RubberUp’s stock  Financed with cash and with debts Decision PwC @ Polaris 7 Impacts - Ensure minimum human capital change - Guarantee revenue - Steady cash flow can be devoted to research and marketing campaigns - Avoid multiple taxation compared to purchase lower than 51% - Lower cost compared to acquire 100% - Protect shareholder’s benefit compared to stock exchange purchase, we know value will go up
  • 9. Current Situation Our Process Financial Impact Short-Term Initiatives PWC Support PwC @ Polaris 8
  • 10. Balance Sheet Impact  Consolidated balance sheet  Greenlight becomes holding company  RubberUp becomes subsidiary  Taxes are consolidated  Synergistic effect PwC @ Polaris 9
  • 11. Tax Implications State tax reliefs; specifically Georgia and Mississippi Tax credits available from the federal government for sustainable enterprises Immediate claim to depreciation on RubberUp’s assets PwC @ Polaris 10
  • 12. Market Power RubberUpGreenlight After the acquisition of RubberUp, we expect the market power of the consolidated company to be greater than before the acquisition. Consolidated Company PwC @ Polaris 11
  • 13. Current Situation Our Process Financial Impact Short-Term Initiatives PWC Support PwC @ Polaris 12
  • 14. Complementary MethodsTest Tube ShapesJoin Rubber Manufacturer’s Association Launch a marketing campaign Support eco-friendly tire projects 01 02 03 PwC @ Polaris 13
  • 15. Rubber Manufacturer’s Association Designed to ensure environmental diligence with their products RMA Mission - Tire-Derived Fuel - Ground Rubber - Applications - Civil Engineering Scrap Tire Market PwC @ Polaris 14
  • 16. MARKETING CAMPAIGN “TIRE CRAFTSMAN” • Tire Art • Recording • The Campaign Promo: • Social networks • Media • Newspaper/magazines PwC @ Polaris 15
  • 17. Microscope Shape for PowerPoint We recommend an increase in funding from 3 to 5 percent for degradable tire projects Increase Research Funding PwC @ Polaris 16
  • 18. Current Situation Our Process Financial Impact Short-Term Initiatives PWC Support PwC @ Polaris 17
  • 19. Ladder Infographics for PowerPoint05 04 03 02 01 Tax-free acquisition Financing ratio analysis Negotiation Complete valuation of RubberUp Due diligence PwC @ Polaris 18
  • 20. Greenlight Sustainability Solution & Strategy Planning Polaris Solution Specialist Team A detailed look at sustainability strategy and environmental reputation reestablishment Nov 2016
  • 22. Appendix Numbers in thousands RubberUp Valuation: 2,800 Greenlight Valuation: 30,000 Projected Pro forma Impact Net Sales 37,000 Net Income 6,200 Total Assets 20,000 Total Liabilities 13,000 Total Equity 7,200 All numbers are in thousand
  • 23. Appendix We arrived at the valuation of RubberUp by benchmarking its revenues and headcounts with similar firms. To get the exact valuation, we found a firm, West Coast Rubber Recylcing, Inc., with revenues of approximately $7 million and headcounts of more than 40 employees. The valuation was at $2.8 million, which we then used for our valuation of RubberUp.
  • 24. Appendix Federal depreciation allowance: 50% depreciation credit may be taken for equipment and the machinery used for recycling within the first year the property is in service. Manufacturing tax credits: An income tax credit worth 5% of eligible businesses in Mississippi on investments totaling over $1 million

Editor's Notes

  1. https://rma.org/scrap-tire/scrap-tire-markets About the Rubber Manufacturers Association: RMA is the national trade association representing tire manufacturers that make tires in the United States.RMA began its scrap tire program in 1990. RMA works with all stakeholders, including states, U.S. EPA and the industry to develop markets, reduce scrap tire stockpiles and implement state regulations that foster sustainable scrap tire markets. RMA supports all scrap tire markets that are environmentally sound and economically feasible.
  2. Degradable projects: Since 2012, the research led by Hassan S. Bazzi, Ph.D., at the Texas A&M University campus in Qatar (TAMU-Qatar)