Investors allege mismanagement by former Senate candidate’s family, offer to buy them out

Boston investment manager Shawn Kravetz wants to take control of some choice real estate on the north Strip, a potentially lucrative move.

But he faces a big hurdle: failed Senate candidate Sue Lowden’s family.

Kravetz, president of Esplanade Capital, recently offered $101.5 million to buy Archon Corp., which is majority owned by the Lowdens. Archon owns the 27-acre former Wet 'n Wild site near Sahara Avenue, as well as the 416-room Pioneer Hotel and Gambling Hall in Laughlin and office buildings in Boston and Gaithersburg, Md.

The Lowden family owns about 85 percent of Archon’s stock, said Kravetz, whose firm is the third-largest shareholder. He proposed the buyout last month and announced it publicly Monday.

Kravetz wants to pay a premium of at least $17.50 a share. Archon’s stock closed at $12 Wednesday, putting the value of the company at $70 million.

Led by Sue Lowden’s husband, CEO Paul Lowden, Archon is plagued by mismanagement and poor corporate governance, Kravetz said. He said he has tried repeatedly to meet or talk with Paul Lowden but is consistently ignored. Kravetz criticized the board of directors’ move in spring 2011 to stop filing publicly available financial statements with U.S. regulators and slammed the company for deciding not to sell the Wet ‘n Wild property for a potential $475 million during Las Vegas' real estate boom. The property is worth far less now.

Paul Lowden did not return a call for comment.

Kravetz said he wants to buy Archon because he likes all of its holdings, not just the Las Vegas property, though he noted the north Strip could be rejuvenated. The former Sahara is expected to reopen next year as the 1,600-room SLS Las Vegas, and the mothballed Echelon project is slated to become Resorts World Las Vegas, a 3,500-room, Chinese-themed mega resort.

“For the first time in years, things are starting to happen,” Kravetz said.

Archon’s second-largest shareholder is New York hedge fund D.E. Shaw Group, which has fought bitterly with the Lowdens. In 2005, it threatened legal action when Archon’s board proposed giving $4 million in stock to two employees, David Lowden and Christopher Lowden, Paul Lowden's brother and son.

The firm sent a letter to Paul Lowden saying his actions “make us wonder whether Archon Corporation is seeking to be run as a family fief on which minority shareholders remain as serfs.”

A spokesman for D.E. Shaw did not immediately comment on Kravetz’s buyout offer.

Sue Lowden, a former TV news reporter, was a Nevada state senator from 1992 through 1996. She had hoped to be the Republican candidate for U.S. Senate in 2010 against Senate Majority Leader Harry Reid but lost her primary bid to Sharron Angle. On the campaign trail, Lowden touted her career as a businesswoman and mocked Reid for spending scant time in the private sector.

Lowden has been a board member and executive vice president of Archon since its inception in 1993, though her husband has been the president, chairman and CEO throughout the company’s history.

He held the same posts at the company’s predecessor, Sahara Resorts, from 1982 through 1993. Sue Lowden joined the board of Sahara Resorts in 1987.

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