AMERICAN HOMESTAR SIGNS DEFINITIVE AGREEMENTS TO ACQUIRE STOCK OF HEARTLAND HOMES, INC. AND OPERATING ASSETS OF MANU-FAC HOMES, INC.

HOUSTON--(BUSINESS WIRE)--July 30, 1996--American Homestar Corporation (Nasdaq/NM:HSTR) today announced that it has signed definitive agreements to acquire the stock of Heartland Homes, Inc. and the operating assets of Manu-Fac Homes, Inc. Both transactions, for a combination of cash and notes, are expected to close on or before August 30, subject to satisfactory completion of due diligence and certain other conditions.

Heartland Homes, a single-plant manufacturer located in Henderson, North Carolina, had pretax earnings of $1.6 million in calendar 1995 on revenues of $21.2 million.

Manu-Fac Homes is a contractually affiliated group of fifteen independent retailers throughout North Carolina, operating under the CHOICENTER or WESTWOOD Homes trade names. Heartland Homes is a major supplier to the CHOICENTER and WESTWOOD network. In calendar 1995, Manu-Fac had pretax earnings of $642,000.

American Homestar's co-chief executive officers, Finis F. Teeter and Laurence A. Dawson, Jr., said, "These acquisitions give American Homestar an immediate and established presence in North Carolina, South Carolina and Virginia. Those three states accounted for nearly 59,000 manufactured housing shipments in 1995 and represent one of the largest markets for manufactured housing in the nation. In addition, the current management of both Heartland and Manu-Fac will remain intact so there will be no loss of momentum. These acquisitions also provide another platform for future growth, paving the way for expanded manufacturing and retailing activity as well as a growing base of business for our mortgage and insurance operations. Together with the pending Guerdon acquisition, American Homestar's operations will soon reach from coast to coast."

American Homestar produces manufactured homes from its three plants in the Dallas-Ft. Worth area and retails its products through 46 Company-owned and approximately 100 independently owned retail sales centers in Texas, New Mexico, Oklahoma, Louisiana, Colorado, Arkansas and Kansas. The Company also provides retail financing through its finance affiliate, 21st Century Mortgage Corporation, and provides transportation and insurance services to its customers. In addition, the Company is currently managing, and plans to acquire, Guerdon Homes, which will add four manufacturing plants and nearly 150 independent retailers in three new market areas including the Pacific Northwest, Rocky Mountain and South Central regions.

CONTACT: American Homestar Corporation, Houston

Craig Reynolds, 713/334-9702