Senior councillors are being asked to back new loan terms for the i360, with more than £47 million in total owed to Brighton and Hove City Council.
The new loans terms – a “restructuring” of the seafront attraction’s debt – will enable the council to sweep up any spare cash in the i360 business every six months.
And the first “cash sweep” – scheduled for last Thursday (30 June) – was expected to have brought in a least £700,000, according a report to the council’s Policy and Resources Committee.
The report was published late last month – and the total from the first of the cash sweeps is yet to be finalised.
The i360 would be left with enough money to meet its “cash flow” needs, according to the report, and a major repairs fund would also be built up.
The council also said that under the new loan terms, the i360 would repay its total debt and that none would be written off.
It will also continue to receive 1 per cent of the revenues from ticket sales in perpetuity.
The report, which is due to be discussed at Hove Town Hall on Thursday (7 July), said: “The council will implement a full cash sweep.
“This will ensure that all surplus cash generated by the i360 in the first five years will be paid over to the council in full.
“Thereafter, the cash sweep will continue but will be subject to (an) incentivisation mechanism.
“If the i360 is able to deliver against its business plan forecast, the council will see 38 per cent of the loan principal being repaid in the first five years.”
The incentive will be implemented through a change in the way that the cash sweeps work. Instead of the council taking all spare cash, it will take a minimum repayment amount.
Any surplus would then be shared, with 40 per cent going to the i360 owners who have themselves provided almost £10.5 million in loans to the i360 business.
The minimum payments have been set to reflect seasonal trading peaks and dips, according to the council, with £900,000 due in December, followed by £600,000 at the end of June next year.
If councillors approve the terms, the minimum repayments will start at just over half the level that currently fall due – almost £3 million a year – and are being missed.
The council will account for the repayments cumulatively so, for example, if the December repayment is £1 million and the payment next June is £500,000, the i360 will not be treated as defaulting on its debt because the cumulative minimum of £1.5 million would be covered.
Well, we told you so.
“The council also said that under the new loan terms, the i360 would repay its total debt and that none would be written off.” Watch this space…. Mind you, paying this loan up to December 2046, is a quasi write off in terms of commercial loans…