It’s emerged that the directors of Penarth Arts and Crafts (a.k.a. PACL) – the “not for profit” company which holds the 125 year lease on Penarth Pier Pavilion – are personally standing security for a new loan taken out by the company.
The loan was taken out from the Royal Bank of Scotland’s Social and Community Capital Fund at the end of July in order to provide increased working capital – specifically for catering developments.
PACL announced in the summer that it had been “successful in a bid to the Royal Bank of Scotland, under its Social and Community Capital Fund for loan funding”.
The loan could not be secured against the Pier Pavilion Building itself – because that is owned by the Vale of Glamorgan Council – so it is the directors of Penarth Arts and Crafts Ltd who have had to guarantee to pay back the money in the event of the company not being able to.
In the event of Penarth Arts and Crafts failing, or going into receivership, the Royal Bank of Scotland’s Social and Community Capital Fund has the option to take over the running of Penarth Arts and Crafts Ltd – and in that case would end up running Penarth Pier Pavilion.
The typical size of loan provided by the RBS scheme is between £30,000 and £750,000. The Penarth Arts and Crafts loan is said to be for a “five-figure sum”
One of the fatal flaws in the original business plan of Penarth Arts and Crafts Ltd was the failure to make adequate provision for working capital to develop and grow the underlying business.
To create more working capital Penarth Arts and Crafts in July 2013 had launched a “membership scheme” which invited local residents to become “members” of the pavilion for £35 a head per annum (an amount later increased to £40). “Members” of Penarth Pier Pavilion were to be entitled to a range of special Pavilion-related benefits and the first 500 “Founder Members” to enroll were to have enhanced benefits conferred on them including 2 free Pavilion Cinema tickets, plus free admission to “members’ screenings”, priority booking for special events , a “programme by post” service and a 10% discount in the Pavilion shop and bar.
Other inducements included a “Limited edition tote bag”, a selection of postcards & “Life membership” .
By October 2013 – 2 months before the Pavilion re-opened – all 500 “Founder Memberships” had been sold, netting the company at least £17,500 in just 6 months – a useful boost to working capital.
By December 2013 Ordinary Memberships of the Penarth Pier Pavilion were being marketed over the counter at the newly-opened pavilion at £40 each.
In the event however “Life membership” turned out to have a disappointingly short time-span .
In February 2017 a member trying to establish the status of the scheme – and when their next subscription was due – was told that an “announcement will be made shortly” . In due course there WAS an announcement – but not what was expected. At the end of February that year the Pavilion announced the closure of the Pavilion for three days out of every seven and the indefinite closure of the Pavilion Cinema – thus changing the whole basis of “membership” and curtailing the “benefits” originally promised. The web site now makes no mention of any membership scheme.
Since the crisis of last year however the Pavilion has resumed full opening hours, the cinema operation has been taken over by SnowCat Cinema, a number of board members have been replaced, Washington Tea has been brought on board to manage the Pavilion Cafe and a new pavilion manager, – Marta Ghermandi Lithgow – joined the company last month.
The next crucial step in the recovery of Pier Pavilion will be the appointment of a new chair of the Penarth Arts and Crafts Ltd later this month.