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Technology staffing firm TSR approves $7 million credit agreement

TSR's board, headed by CEO Christopher Hughes, approved

TSR's board, headed by CEO Christopher Hughes, approved the revolving credit agreement, which is contingent on a separate "capital infusion'' to the company. Credit: Danielle Silverman

The board of TSR Inc., facing a Dec. 30 deadline, has approved a $7 million revolving credit agreement that, if finalized, would let the Hauppauge company buy out dissident shareholders before they gain control of the company, according to government filings.

The unnamed lender, however, requires that the technology staffing and consulting company receive a separate "capital infusion" of at least $750,000 and meet other conditions by that deadline.

The potential financing deal is the latest twist in a battle for control stretching more than a year.

Under an agreement with three dissident shareholders, TSR's incumbent management in October withdrew two candidates for the board of directors after failing to raise $5.96 million to buy the 48.6% of shares held by the three investors.

Instead, two candidates backed by one of the dissident shareholders, Manhattan-based Zeff Capital LP, became directors.

If the company does not secure financing by the deadline, all TSR directors except for the two backed by Zeff would resign, effectively giving the Zeff directors control of the company and allowing them to appoint additional directors and executives.

Zeff and the other dissident shareholders gained a major stake in the company in July 2018, when Joseph Hughes, the founder and former CEO of TSR, and his wife, Winifred, sold them their 41.8% stake in the company.

The previous month, a letter sent by one of the Hughes' sons, James Hughes, on his parents' behalf, had requested that TSR put itself up for sale.

The board, led by chairman and CEO Christopher Hughes, another son of the founder, has so far rebuffed calls to sell the company.

In August 2018, the company adopted a shareholder rights agreement, sometimes referred to as a “poison pill.”  Poison pills are adopted by companies to dilute the holdings of unwanted suitors in an effort to fend off hostile acquisition attempts.

TSR shares closed Monday at $3.20, far below the $6.25 per share called for to buy out the dissident shareholders.

Christopher Hughes said he could not provide more details on the revolving credit agreement beyond what was stated in the Securities and Exchange Commission filing.

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