* CEO, general counsel to quit as part of deal with SBA
* To stop work with small businesses as prime contractors
* GTSI shares rise as much as 18 pct
Oct 19 GTSI Corp GTSI.O said a U.S. regulator
lifted a federal contract suspension on the IT services
provider, but its chief executive and general counsel will
resign to facilitate the agreement.
GTSI said Chief Executive Scott Friedlander and general
counsel Charles DeLeon will resign effective Oct. 26.
However, the company said the Small Business
Administration's (SBA) investigation into its conduct as a
subcontractor for certain small businesses was continuing, and
could result in administrative, civil or criminal penalties.
Earlier this month, the SBA suspended the company from
receiving any new business from the federal government and said
it was investigating possible violations related to a contract
GTSI had with the Department of Homeland Securities.
The suspension also resulted in the withdrawal of a $67
million takeover offer for GTSI by privately owned Eyak
Technologies LLC. [ID:nSGE6930GU]
Under its agreement with the SBA, GTSI will immediately
cease working with small businesses that serve as prime
contractors, a practice that accounted for about 15 percent of
the company's annual revenue.
The agreement will end either on the 90th day after the
completion of the SBA probe on Oct. 19, 2013, or the
notification date of any proposed debarment by the SBA --
whichever comes earlier.
Shares of GTSI were trading up 13 percent at $4.80 in
afternoon trade on Nasdaq. They have fallen 42 percent since
the SBA move on Oct. 1.
(Reporting by Siddharth Cavale in Bangalore; Editing by Anne