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Insurgent shareholders at TSR Inc. take over Hauppauge firm's board

Chairman Christopher Hughes, who remains as president and

Chairman Christopher Hughes, who remains as president and chief executive, and four allied directors resigned from the board. Credit: Danielle Silverman

Insurgent shareholders have seized control of TSR Inc. after the Hauppauge company's incumbent management failed to complete a $5.96 million buyout by Monday's deadline.

Chairman Christopher Hughes, who remains as president and chief executive, and four allied directors resigned from the board of directors under an agreement cobbled together in September.

The change in control marks the denouement of a long-running family and corporate drama.

In a government filing Tuesday, the company announced that Robert Fitzgerald, CEO of investment company QAR Industries Inc., would join TSR's board of directors and that Bradley M. Tirpak, one of two dissident-backed directors installed at the annual meeting on October, would become chairman.

Fitzgerald's QAR, Daniel Zeff's Zeff Capital LP and Tajuddin Haslani's Fintech Consulting LLC accumulated about 49% of TSR's shares, but agreed to drop an effort to take over the computer staffing and consulting company if Hughes and the company would pay $6.25 per share for their stakes.

In early December, the board of directors announced that it had approved a $7 million revolving credit agreement with an unnamed lender to repurchase the shares from the insurgent shareholders, but that deal ultimately unraveled.

In a statement, Daniel Zeff, president and management member of Manhattan-based Zeff Capital, said he was pleased that a settlement had been reached.

"I am confident that the reconstituted board will help focus the company on profitability and shareholder value creation for the long run," he said.

Hughes said he could not comment beyond the news release.

The 50-year-old company, with a head count of 389, held a companywide phone call Tuesday morning to address employees' concerns in the wake of the management changes.

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.

Christopher Hughes took over as CEO and chairman in July 2017 after his father's retirement.

In June 2018, a letter sent by another of the Hughes' sons, James Hughes, on his parents' behalf, had requested that TSR put itself up for sale.

In an August 2018 letter addressed to her brother, Christopher Hughes, Regina Dowd resigned from the board because she "disagreed" with actions of the board of directors, including its expansion from five to seven members and "the unwillingness of you, as chairman...to engage in a full and open discussion."

Later that month, 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, which have a 52-week range of $2.64 to $6.96, gained 2% to close Tuesday at $3.57.

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