PWC Case Competition

Greenlight SustainabilitySolution & Strategy Planning

PolarisPwC Advisory Team

A detailed look at sustainability strategy and environmental reputation reestablishment

Nov 2016

Current Situation Our Process Financial

ImpactShort-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

ImpactShort-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

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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 matchesCosts:- 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

ImpactShort-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 PowerRubberUpGreenlight

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

ImpactShort-Term Initiatives PWC Support

PwC @ Polaris 12

Complementary MethodsTest Tube Shapes

Join 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

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MARKETING CAMPAIGN“TIRE CRAFTSMAN”

• Tire Art• Recording• The Campaign Promo:

• Social networks• Media• Newspaper/magazines

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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

ImpactShort-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 SustainabilitySolution & Strategy Planning

PolarisSolution Specialist Team

A detailed look at sustainability strategy and environmental reputation reestablishment

Nov 2016

Appendix Forecasting

Appendix Numbers in thousands

RubberUp Valuation: 2,800Greenlight Valuation: 30,000

Projected Pro forma ImpactNet Sales 37,000

Net Income 6,200Total Assets 20,000Total Liabilities13,000Total 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