OVERLAND PARK, Kan., May 26, 2010 (GLOBE NEWSWIRE) -- The Management Network Group, Inc. (Nasdaq:TMNG) ("TMNG" or the "Company") today announced that its Board of Directors intends to amend its stockholder rights plan (the "Rights Plan") in July 2010 to increase the ownership threshold under the Rights Plan from five percent (5%) to fifteen percent (15%) and to delete the provisions of the Rights Plan relating to the Company's net operating loss carryforwards.
The Board's determination to amend the Rights Plan was based upon several considerations. The risk of an "ownership change" that would reduce the Company's ability to utilize net operating loss carryforwards in the future is expected to decline in July 2010. An "ownership change" is generally a more than 50 percentage point increase in stock ownership, during a moving 3-year testing period, by stockholders owning or deemed to own five percent or more of the outstanding shares. A large stock transaction that occurred in July 2007 will be removed from the three-year testing period in July 2010.
In addition, the Company believes that the combination of the 5% ownership threshold in the current Rights Plan and the Company's relatively small size may dampen potential investor interest in the Company, including the interest of institutional investors. Also, the 5% threshold and the Company's size have resulted in inadvertent violations of the threshold through relatively small investments, which have created potential issues under the applicable tax provisions and diverted management time and attention.In the event that the Company's risk of an "ownership change" increases in the future, the Company will consider at that time whether it is in the best interests of the Company and its stockholders to reduce the ownership threshold in the Rights Plan. There can be no assurance that the Board of Directors will take actions in the future to fully preserve the Company's net operating loss carryforwards, given the costs and benefits associated with taking action. The Company had federal net operating loss carryforwards of approximately $40.9 million as of January 2, 2010. However, the Company has recorded a valuation allowance against all deferred income tax assets related to these net operating loss carryforwards due to the operating history of the Company's US operations.