THE OTAGO Rugby Union has been saved after the Dunedin City Council agreed to bailout the cash-strapped union.
The DCC voted to write off debt of more than $400,000, while the New Zealand Rugby Union has also agreed to lend it $500,000.
As part of the deal, the ORU board has to resign.
The DCC deliberated for close to eight hours behind closed doors, before agreeing to the clear the $400,000 debt the union owed it.
Councillors voted 8-5 in favour of the rescue package in a non-public council meeting which ended at 10.30pm.
An $80,000 debt to Dunedin Venues Management Ltd was also written off.
Along with an agreement reached with the Bank of New Zealand over a $1.2 million loan, the ORU believes it has a recovery package which will put the union on a sustainable long-term footing and see it field a team in this year’s ITM Cup.
DVML would take over the commercial arrangements of the ORFU, the ORFU board will resign, and the union's constitution modernised to improve governance. The NZRU would have an observer or representative at all board meetings, and approve all player signings.
The player wage bill will slashed by $290,000.
A $270,000 NZRU loan from earlier this would be turned into a grant.
A debt recovery plan for the 180 local creditors who are owed $680,000 would be drawn up next week.
The ORU twice deferred going into liquidation after revealing it was unable to service debt of $2.35 million last month.
What the deal involves
• Three-year financial plan for ORU
• NZRU to provide $500,000 loan for working capital
• All Blacks tests in Dunedin in 2013, 2014
• Player wages for 2012 slashed by $290,000
• DCC, DVML to forgive $480,000 debt
• All proceeds from North v South match to DVML
• Three-year Forsyth Barr venue hire agreement for Otago ITM Cup team
• DVML to manage the commercial and sponsorship rights of ORU
• Local businesses prioritised in debt-repayment plan
• NZRU to enter into an additional sponsorship commitment with BNZ
• ORU board to resign.
With the series level, expect both teams to put it all on the line as they seek to win the deciding test in Sydney on Saturday night.