Finance specialists will continue to look at how to make changes to the Brighton i360’s loan repayments while protecting the taxpayer.
These could even include Brighton and Hove City Council taking over the i360 itself or forcing or persuading the owners to sell the seafront attraction to another business such as Merlin, which runs the Sea Life Centre.
Other options are to ask the i360 owners to put in more of their own money, give the i360 more time to make repayments or allow the owners to pay back the money at a lower rate of interest.
The finance specialists, GVA, told members of the council’s Policy, Resources and Growth Committee in a report: “Based on the summer trading figures, it is unlikely the i360 consortium will be able to meet their full loan obligations in December 2018.
“As such the council has begun to consider options on restructuring the current debt to ensure that their investment is protected.”
A decision on what to do next to deal with the i360’s debts is expected when the Policy, Resources and Growth Committee meets in December.
Councillors this evening noted a report by council officials without debate. It included GVA’s report on the i360’s £36.2 million loan from the Public Works Loan Board, which is due to be repaid at the rate of £922,000 every six months.
The loan was arranged by the council which also takes a cut worth £570,000 every six months – or £1.14 million a year until 2041.
The committee had already deferred one payment of £570,000 – at the end of June – and there is a concern that the i360 will be unable to meet its obligations at the end of December.
The problem was blamed in part on visitor numbers being lower than predicted.
According to the report before councillors, the best case scenario appears to be that the council would face a £1 million shortfall in three year’s time.
By June 2021, when a second loan of £4 million from the Coast to Capital Local Enterprise Partnership (LEP) becomes repayable in full, the i360 will have to find the cash to repay the debt, which forecasts suggest is unlikely, or refinance it.
Representatives of the council, LEP and i360 will meet regularly to discuss a long-term restructuring of the loans before the committee’s next scheduled meeting on Thursday 6 December. If no agreement is reached, the council could force take default action and even force the owners to sell.
Another specialist firm, Leisure Development Partners (LDP), has been appointed by the council to give commercial advice.
LDP has previously advised the owners or operators of the Eiffel Tower and the Palace Pier.
The firm will look at how to maximise the i360’s income and ways to measure and improve its performance.