Greenlight Sustainability Solution & Strategy Planning Polaris PwC Advisory Team A detailed look at sustainability strategy and environmental reputation reestablishment Nov 2016
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
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 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
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
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