Credible five-year business plan developed for i360 as another loan repayment set to be missed
The i360 is expected to miss another £1.5 million repayment to Brighton and Hove City Council at the end of next month.
A report to councillors said that officials were trying to finalise a restructuring of the loan, which would mean a revised payment plan.
But senior councillors would probably be asked to sign it off in the spring rather than by the end of this year as previously planned.
Officials said that they wanted reassurance that the seafront visitor attraction had a credible five-year business plan and they were taking expert advice from Leisure Development Partners LLP – also known as LDP.
A report to councillors said: “Strong steps are being taken by the i360 and there are clear signs of recovery and a credible five-year business plan is being developed to ensure the attraction will be able to pay off the loans owing.”
The council hopes to receive a repayment in the spring although the carefully worded report to the council’s Policy and Resources Committee did not say how much.
The council brokered a £36 million loan for the i360 from the government’s Public Works Loan Board – and the Coast to Capital Local Enterprise Partnership (LEP) handed over a further £4 million.
The council has since taken over the LEP loan – at no cost to the council – but three years of missed payments mean that the i360 now owes more than £45 million in total.
The report said that i360 had had a “strong beneficial impact … on the local economy” and “the attraction has acted as a positive beacon for seafront regeneration”.
It also said that lower than expected visitor numbers had led to repayments being deferred, adding: “In particular, the covid pandemic has had a significant impact on income and cashflow into the i360.
“Since January 2019 (the board and management of the i360) have taken steps to turn around performance and manage costs. However, the impact of the pandemic is of course still being felt.”
Positive steps have included bringing in-house the previously outsourced management of the restaurant and conference space, leading to a “notable increase” in catering revenues in the summer.
The report to councillors said: “New revenue streams, and improved publicity and social media coverage, have been driven by innovative ideas such as the iDrop abseiling and the Tower Climb. Other new plans for diversifying revenue streams are being explored.
“The Skybar (in the pod) and the retail shop have both shown strong performance recently, up on both comparative years and on budget.
“A lot of strong marketing and PR work has been done, with the attraction … used for high-profile outside broadcasts, with Good Morning Britain using the pod for weather forecasts.
“The £4 million loan from Coast to Capital LEP to the i360 has now been transferred to the council, at no cost.
“That element of the loan will be restructured at the same time and amalgamated into one single loan.
“Repayment of that part of the loan will see the council receiving £4 million over the life of the loan that it would not have otherwise received.
“The restructure is likely to be based on a similar concept as previously: the i360 agree a business plan that sees their visitor number grow over a five-year period and the council undertakes a ‘cash sweep’.
“This means taking all available money in the business that is not needed to remain operational and solvent.
“Eventually, once visitor numbers improve, this cash sweep will see the council taking enough money to cover the loan payments – and potentially more to reclaim our lending more quickly.
“Until the restructure is completed, the terms of the existing loan agreement apply. This would mean a payment of £1.492 million becomes payable on 31 December 2021.
“There is still not enough cash in the business to cover that. Instead, it is proposed that the December 2021 payment is not taken on that date.
“The recommendation is that the council should complete the restructure in spring 2022 and then take a payment upon completion in line with the terms of the restructure.”
The council’s Policy and Resources Committee is due to meet at Hove Town Hall at 4pm on Thursday (2 December). The meeting is scheduled to be webcast on the council’s website.