Pascal still high on Alon project after Crown Resorts backs out

By Thomas Moore

Friday, Dec. 16, 2016 | 2 a.m.

On Thursday, the management of the Alon, the nearly 35-acre high-end resort planned for the site of the old Frontier, said it would continue to work on the project despite losing its main backer, Australia-based Crown Resorts.

Crown said its divestiture from Alon is one of several strategic moves it’s making to pay down debt and to “redeploy capital to fund high quality growth projects as well as adopting a number of capital management initiatives.”

Crown purchased the site and its CEO Robert Rankin and Executive VP of strategy Todd Nisbet sit on Alon’s board along with former director of Crown Resorts, James Packer.

Later in the afternoon Thursday, the Las Vegas Sun spoke with Andrew Pascal, head of the company that’s developing the Alon, to ask him what’s next.

Question: With Crown divesting its interest in Alon, what will happen with members of Alon’s board who are Crown executives?

Pascal: That won’t change until the point in time when we resolve how we’re going to refinance the project going forward and the extent to which that changes Crown’s ownership interest and therefore their overall participation in the governance and participation in the company.

As you know, Crown came in and invested in Alon based on the idea of Alon and ... how perfect Alon is positioned and the strength of our team.

Now, they (Crown) have got a lot of things going on and have said they no longer want to continue to invest going forward. They have said to us, "We’re going to consider all our options and want you to help us explore what those are."

To the extent that they are divesting their position, and someone else comes in and provides all the equity capital we’re looking to raise, absolutely that would affect their position on the board.

In the past, you’ve said you were working on completing the financing and that you have commitments from some parties and strong interest from others. Has that changed?

I would say we continue to advance on a bunch of different opportunities, and we’ve got no further commitments (since we last spoke). But as a result of Crown’s announcement we have some renewed interest and new interest.

In terms of where we are now, this might actually create some opportunity for us and we’ll see how it plays out.

One gaming analyst said a delay or cancellation of Alon might actually be good for the market because the Strip is still recovering from the recession and absorbing a glut of capacity.

If you look at the overall trends, the average daily room rate and REVPAR (revenue per available room) it’s safe to say the market has finally absorbed all the capacity that came on line in 2008 and 2009 markets.

That latest quarter and quarter year over year REVPAR growth ... is quite compelling.

My view is you have record visitation in the market for the third straight year and record spending in the market for the third straight year now.

Our development is just over 1,000 rooms. That’s hardly a meaningful increase in capacity. And you also have to look at the type of capacity we’re creating. It’s a premium, high-end room.

I think that it’s good for the market. If you look at the collection of amenities and all the elements that make up Alon, I think it’s going to stimulate a lot of interest and not only command its appropriate share of the market that’s already coming to Las Vegas, but also stimulate growth and attract a type of visitor that’s not coming today.

When do you make the decision that it’s not coming together and to call it quits?

If we get to a place where we have exhausted all the options that are active and available to us.

The group that’s part of Alon are mature and experienced and have been around this a long time. We want to maintain our objectivity. Everyone here is in our professional prime. Nobody wants to be attached to a project that’s not (going forward). This development keeps them out of the market and I don’t want to continue to ask that they remain committed (if it's not working).

We’re really transparent within the company and in the team, universally, everyone feels we have some opportunities that are active and available.

I can’t tell you certain date … when we will be done or won’t proceed. It’s more a matter of saying to ourselves, "What are the active opportunities we’re pursuing" and qualifying them to see if if they feel real. To the extent they don’t, then we'll make the hard decisions.