i360 loan restructure could be postponed to next autumn

i360, Brighton
i360, Brighton

Councillors will be asked to postpone a decision on restructuring loan repayments from the British Airways i360.

A report to next week’s policy, resources and growth (PR&G) committee asks councillors to defer the consideration of a formal restructure of the loan until its meeting in October 2019.

In June, the i360 board asked if it could defer part of its payments to the council as it had attracted fewer visitors than expected since it opened in August 2016.

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Visitor number woes prompt i360 to ask for ‘flexibility’ over council payments

At the time, Julia Barfield, chair of the Brighton i360 Ltd, said the council would still make a £35m profit on the loan it borrowed to build the attraction, but asked for ‘flexibility on the timings’ of the payments.

The seafront attraction was funded by a £36.3m loan which Brighton and Hove City Council borrowed from the Public Works Loan Board.

Every six months, the i360 was set to pay the council £900,000 to repay the loan, as well as just over £1m a year for servicing the loan until 2041.

The report to councillors explained how the i360 had deferred part of its payments to the council in June and would do so again in December.

It said: “Since the June PR&G meeting visitor numbers in the second half of 2018 have continued to disappoint, being less than the revised visitor number forecasts that were made by the i360 at the time of that report.”

The committee will be asked to defer £880,304.25 of the £1.49m due on December 31 2018.

GVA Real Estate Finance (GVA) had been appointed by Brighton and Hove Council to review the loan arrangement, and has advised the council to take more time to consider the options.

Options include renegotiating interest rates on the payments, the council taking more control over the attraction or allowing a third party to take control.

The report said: “It is recognised that no options for the future of the financing of the i360 offer easy or guaranteed ways of protecting the public purse and ensuring payback of all money that the city council expected to derive from the i360 loan agreement.

“Work needs to be done to ensure the ongoing viability of the attraction so it can ensure that the public purse is not negatively impacted further.

“For this reason it is proposed that a partial deferment of payment of both the PWLB and margin elements is agreed and that the city council continues to work with the i360 to build the attraction’s success.”

An i360 spokesperson said: “At this stage this is a recommendation only. We await a final decision from the council’s Policy Resources & Growth committee next Thursday.”