i360 tower operators given multi-million pound debt warning

The Brighton i360 has been given a million-pound warning as councillors allowed the seafront attraction’s operator more time to pay off its debts.

The i360 owes Brighton and Hove City Council almost £48 million, including interest, and has been told to make payments totalling at least £1 million this year.

The owners were warned that if Labour wins the local elections in May, they could look for a new operator if repayments keep being missed.

But this would almost certainly mean that the council have to write off much or all of the debt while still owing millions of pounds to the government.

Councillors decided against foreclosing on the debt now because it would risk a closure before the summer season – the best chance of the attraction making enough money to pay down some debt.

So far, the i360 has repaid £5.8 million but, under its original repayment schedule, had been due to stump up almost £18 million by now.

The latest crunch meeting – a special meeting of the council’s Policy and Resources Committee – was called after a missed repayment of £900,000 at the end of December.

And it followed a demand by the council’s external auditors for the risk to be recognised in the annual budget which was set last week.

The council is setting aside £2.2 million a year to cover repayments to the Public Works Loan Board, having brokered a £36 million loan to enable the observation tower to be built.

Councillors met at Hove Town Hall for four and a half hours today (Monday 27 February) and spent more than two hours in closed session discussing the finances in detail.

They considered a report which said: “It is … recommended that the board and management be given time to implement their new strategy for a successful attraction at the i360.

“This will likely be the best option to maximise the council’s return and protect the public purse.”

The strategy includes “walks” on top of the i360 pod and “immersive experiences” that mix theatre with food and drink as well as street food stands and a “games bar”.

The i360’s bosses told councillors that it had been badly affected by the coronavirus pandemic, followed by the “cost of living crisis” and rising inflation, in common with the wider tourist economy.

But councillors said that the i360 had missed payments on its debt before the pandemic.

The Green leader of the council, Phélim Mac Cafferty, asked for “contrition” and said: “Only a few days ago, we had to set the budget. It has been absolutely horrendous.

“What we would also need to hear is some contrition, some reflection that this is adding to the burden on the city.”

Founding director Julia Barfield, who chairs the i360 Ltd board, said that the economic situation was “dire” and she said: “We are very sorry if anyone suffers because of the i360. I’m very sorry.

“We are also contributing to the city to the tune of £30 million a year. It’s a desperate situation but we are doing our best to come out of it with a whole new provision for the future.”

Councillor Mac Cafferty asked why the i360 did not make enough money to service its loan repayment due at the end of December, despite the success of the nearby Shelter Hall.

He said: “You operate on one of the most successful spans of coastline in the entirety of the United Kingdom.

“You are feet away from Shelter Hall where you have to book ahead. I’ve never been able to turn up at Shelter Hall and just get a seat and have some food and drink.

“I’m wondering what has been missing on the board. The rest of us can look up and down the coast and see places like Shelter Hall doing really well. What has been missing from the board that means you haven’t been able to do that?”

Mrs Barfield said that the i360 had helped to regenerate the whole area, pointing out that the Shelter Hall was a building site for the first four years of operation.

Conservative leader Steve Bell asked the i360 board why it had not signed the loan restructure agreement last year.

The revised schedule meant lower interest, lower repayments for several years and regular cash sweeps to service the loan.

Mrs Barfield said that the loan restructure had been agreed in principle and there was no reason why the agreement was not signed.

But the council’s assistant director for city development and regeneration Max Woodford said that there were outstanding issues to resolve.

However, the restructuring did not work once the first payment was missed without an agreement in place.

Councillor Bell said that the i360 company owed it to the city to apologise, adding: “Why is it acceptable that you do no repay the loan – the monies you’ve borrowed from the residents of this city by the council on their behalf? Why is it acceptable that you don’t repay it?”

Mrs Barfield said that she did not think it was acceptable but “just not possible at this time”. She said that the i360 company intended to repay all the money in the long term.

Another director, Eleanor Harris, the former i360 chief executive, told councillors that, according to unpublished figures from the Association of Leading Visitor Attractions, the i360 had “performed well” compared with other indoor attractions nationally.

She said that the £30 million economic benefit to the city had been calculated scientifically, taking into account hotel stays, restaurant bills, taxi fares and other visitor spending.

And by using local suppliers whenever possible, Ms Harris said that the i360 had added more to the income of the city.

Labour councillor Amanda Evans asked how the i360 could be described as successful when it could not pay its debt.

She said: “I understand some attractions, purely in terms of visitor numbers, perform better than others – and I appreciate people are working hard to make that happen.

“But it is complacent and insulting to describe something as ‘bouncing back successfully’ when it is not paying its debts.”

Another Labour councillor, Clare Moonan, said that Labour had never thought it would make sense to borrow money from the Public Works Loan Board for a visitor attraction.

She said: “We’ve tried to make it work for the last six years – and we will continue to try to make it work because that is in the best interests of the city.

“It’s £151 per person in the city – the repayment of this loan – so we need to make it work in the best interest of residents of the city.

“If it was autumn, I might be recommending we pull the plug and get a new operator. It’s not. We’re in the spring. We’ve got the summer ahead and we’ve got to try to get what we can out of the i360 over the summer.”

After two hours of discussion behind closed doors, councillors agreed to

Note the new strategy

Affirm the council’s key focus is to ensure as much of the public money owed by the i360 is paid back quickly

Reserve the right to step in and enforce its rights under the loan agreement

Commission restructuring experts to ensure regular and frequent finance updates and cash flow forecasts from the i360

Receive further details on the short-term plan for the summer 2023 season by the end of May

Seek significant reassurance of the viability of a new long-term business plan through the i360 member working group