The Brighton i360 has told the council that it is unlikely to make the £900,000 minimum loan repayment that falls due in a fortnight’s time.
Brighton and Hove City Council said: “The i360 board has written to the city council, setting out that the difficult trading conditions mean that they are not likely to make the minimum payment in December 2022.”
As a result, the total amount owed to the council by the i360 is likely to exceed £47.5 million.
It also emerged that the i360 has not signed the revised loan agreement, with a lower rate of interest, which was approved by councillors in July.
The council said: “A lot of work has taken place on drafting a revised loan agreement. However, the issues with the cash flow became apparent prior to signing the new agreement, and so work has been put on hold.”
A report to the council’s Policy and Resources Committee said that the council was paying interest to the government’s Public Works Loan Board for the i360 loan at a rate of 2.78 per cent.
The council has been charging the i360 an additional margin of 3.75 per cent, making 6.53 per cent, but the draft restructuring agreement proposed a rate of 3 per cent.
This week the council said: “The assumption is interest is being charged at the new lower rate of 3 per cent on the basis that the revised loan agreement would be backdated to Friday 1 July. However, the revised loan agreement is currently on hold.”
One crumb of comfort for the council is that the loan from the Public Works Loan Board is fixed at 2.78 per cent for the term of the loan.
But the outstanding sum will have risen from the original £36.2 million to £43.4 million on Saturday 31 December.
The council is also owed £4 million after taking over, at no cost to the council, a further £4 million loan from the Coast to Capital Local Enterprise Partnership (LEP).
The LEP has written off the money, with the council due to benefit from any repayments if they are ever made.
Under the draft loan restructure, the i360 would not have to pay any interest on the £4 million LEP loan.
But the main loan – agreed in 2014 – will have accrued interest of more than £323,000 between the start of July and the end of this month.
Under the draft restructuring agreement, the i360 was expected to make a payment of at least £900,000 at the end of this month.
If it did so, this would be the biggest repayment since June 2018 – and more than the £700,000 received by the council in late June or early July this year.
The operator missed both of its six-monthly repayments last year and in 2020.
Since its last repayment, the sponsorship deal with British Airways has ended and no replacement headline sponsor has been found, adding to the financial challenges.
The i360 also owes money to the council from ticket sale receipts. It was due to pay the council 1 per cent of its ticket sales in perpetuity.
The 531ft (162m) tower opened in August 2016 and, the council said, had paid ticket revenues totalling £39,870 in 2018 and £31,653.48 in 2019.
The council added: “The i360 calculated £16,250 would be due in 2020 (due to covid affecting income). But this has not been paid.
“And we have not received a calculation or payment for 2021 – another covid-affected year.
“These sums are being pursued by the council and at the end of the year a calculation for 2022 will also be requested and scrutinised.”
Wonder how much its worth a scrap?
Not much, Rostrum, I would guess. A load of metal and glass wouldn’t make much of a dent in the debts, but it would at least end this very sorry saga.
Money laundering? Sharp loan practices?
You’ve got to question why the i360 board haven’t signed a loan agreement at a lower rate of interest agreed 6 months ago. And why payments of 1% of ticket sales haven’t been made for 2020 or 2021 yet. The council seem to allow this group to do what they want – not pay and leave us, council taxpayers, with increasing debt.
Time for ultimatums I think. Commit or go. And by go, I mean sack the current operators and let the council museums team take over. Not ideal, but it’s clear that we as council taxpayers are liable, money isn’t coming in and promises aren’t being kept year after year. At some point, even to a slow-moving council, you have to lose confidence in the operators and change course.
Its badly run and in darkness early evening. For it to become viable the complex needs used around the clock. Put bars and a nightclub in the surrounding buildings to get revenue coming in. The pod could be a cocktail bar doing hourly flights at night when there is demand.( Easy to fit a loo in, it already has a bar.) I live opposite we all said the numbers they were expecting would not happen we are seasonal. Even in summer we are quiet on a rainy day.
Or how about a STAR WARS ATTRACTION, the flying saucer is already built.
The venue is simply not getting used to its impossible to pay the loan back.
Let’s be clear this attraction is bankrupt given the fact it can’t meet financial commitments. So why is it allowed to continue to operate? The council is taking on more and more liabilities as the debt owed is increasing. The people that were responsible for exaggerating the business case should be sought legally as this is borderline criminal. No doubt no one will take responsibility and the taxpayer will take a huge hit when this attraction eventually shuts down.
Least surprising news of 2022. A monument to failure and those that voted for this, (the Green group and 4 Tories)
Time to pull the plug pronto and salvage what can be salvaged. This was never a good runner. Those who approved it (and I don’t care who they were politically) were clearly seduced by a load of hype. The permission for the wheel ended and was not renewed, even though the operators of the wheel wanted to retain it, so they were clearly making some money – and, much more imoportantly, council taxpayers were not on the very hefty hook for it.
The prices for less than a half-hour ride up on the thing – to see not a lot, as you could get the view of the wind farm etc from a higher point up a B&H hill, assuming it wasn’t foggy, as it often is – are totally hideous. Consider a family coming down from London (if there were trains, which is a lottery) and paying arms and legs for the fares, this non-event experience, food etc. I imagine they would go home very disappointed. Furthermore, with family finances so stretched at present, and likely to remain so for quite a time, who is going to find all that money for a trip to the I360? That’s a rhetorical question because very few people would do it, especially in the depths of winter.
So, let someone show some commonsense and cojones and kick this thing in its current iteration into touch. Sell it for the scrap it currently is, turn it into something viable. or whatever and cut the losses. Whoever actually owns the thing should be sued for the debts and/or be the subject of a compulsory winding-up order. Whatever the route is to sever this millstone round out necks should be taken PDQ. It’s not acceptable to me – and, I would imagine, a very large body of taxpayers, that this fiasco just drifts on., with no meaningful payback to the council and a general wimpish attitude from the council to roll over whenever the due payments are not forthcoming – which is nearly always.
As those with any brain predicted when it was first proposed that the i369 would be an utter failure. Kitcat voted for it because he knew the greens were going to loose to Labour and he wanted to leave a poisoned chalice. Geoffrey Theobold dragged the Conservatives group into the vote because he felt he had no legacy like his daddy did ( Alderman who forced through the Brighton Centre) So now we are stuck with a £45 million white elephant because of a spiteful schoolboy and a grown man with daddy issues. Send Jason and Geoff the bill.
You’ve summed this up pretty well, Yibble, except for one thing.
Unfortunately, most people wrongly assume that Geoffrey theobald seduced the entire Tory Group into voting for the Eyesore monstrosity but he didn’t get away with it because FOUR of his Councillors voted against it!
Those brave and sensible souls were: Dawn Barnett, Mary Mears, Lynda Hyde and Geoff Wells, all four Brightonians who had, at one time or another, run their own local businesses (I suspect there’s a moral there!) and I have a feeling that there was a fifth, who’s name escapes me.
RESPECT TO THEM!
I look out of my window at night and see it, always lit up. Even now, in daylight, some of the lighting is still on. With so many people in this country now unable to afford to heat their homes, it seems criminal that this waste of energy is still allowed to continue, especially in a structure that is now costing millions, and has been hated by almost everyone to whom I have spoken, almost right from the start. What a depressing insult. It seems like a symbol of everything that is rotten with our council.
Future generations may wonder why such a huge, hideous piece of metal was allowed to be constructed there. They should be reminded that this was created and supported during a period of great vanity and arrogance on the part of council members, with little regard for those ratepayers whom they represented.
The fact that B&H Council are so reluctant to sink this company may tell us that they have a weak set of guarantees/rights in place. Still, it will only get worse with time. It may never see profitable operating. A flawed business model accepted by the Council, and they still keep buying into reformed, and seemingly unacheivable business models. Somebody will “take a haircut” on this deal and sooner is better than later..
Totally agreed, Chris. Give the owners, whoever they are, a very short-dated ultimatum to pay up and, if they don’t – which they won’t – then take some sort of legal action or whatever to kick them into touch. The longer this goes on, the more on the hook the council (i.e. we taxpayers) is for this fiasco. The general public have never seen what sort of contract/deal the council has with these people – which suggests, as you say, a weak set of guarantees/rights.
British Airways didn’t pull out of the sponsorship for nothing – they saw what a fiasco it was and ran.
The people to take the haircut are we taxpayers, obviously.
Sell it to the Americans, they could mount it on the edge of the grand canyon. I’m sure they’d make money from it.