Alpha to Acquire Manufactured Housing Business.

NEW YORK--(BUSINESS WIRE)--Dec. 9, 1998--Alpha Hospitality Corp. (NASDAQ:ALHY; BSE:ALH)(the "Company") announced today that it has entered into letters of intent to acquire all of the issued and outstanding shares of Sunstate Manufactured Homes of Georgia Inc. ("Sunstate") dba Peach State Homes and its affiliated company, South Georgia Frames Unlimited ("South Georgia"), two closely held corporations engaged in the manufacture and sale of single family homes.

The closing of these transactions is subject to certain conditions, which include Alpha's completion of due diligence, the execution of definitive agreements and the approval of Alpha's Board of Directors.

Sunstate and South Georgia currently own and operate three (3) manufacturing facilities in Adel, Georgia. Additionally, Sunstate has recently developed four (4) retail centers in which they hold a majority interest. The retail centers feature the Peach State(TM) and Navigator(TM) lines currently produced by Sunstate.

The purchase price will be approximately $10,000,000. The final price will be determined by the ultimate verification of the adjusted cash flow of the entities for the twelve-month period ending Sept. 26, 1998, expected to be approximately $2,000,000. The purchase price will be paid with a combination of cash and Alpha stock. Upon closing, the company will expand its Board to add two new board members. The selling shareholders of Sunstate, certain of whom will remain in their current management capacity, will nominate the additional Board members.

An Alpha spokesman said the company has been exploring business opportunities since the sale of the majority interest in its primary operating asset, the Bayou Caddy's Jubilee Casino in Greenville, Miss. in March of this year. The company's criteria for acquisition candidates includes strong existing management and the growth potential of its industry, as well as the consolidation opportunities within the industry. According to the Manufactured Housing Institute, the manufactured housing industry has grown substantially over the last several years and makes up between 30% and 35% of all new single family housing units sold in the country each year. There are currently in excess of 6,000 independent retailers of manufactured housing in the United States. There were 353,000 manufactured housing units shipped in 1997. The company plans to seek other opportunities in the industry, including additional manufacturing and retail operations and residential parks.

To the extent the content of this press release includes forward-looking statements, they involve risks and uncertainties that are described from time to time in the company's reports filed with the Securities and Exchange Commission and the risks inherent in the manufactured housing industry. The company wishes to caution readers not to place undue reliance on such forward-looking statements, which statements are made pursuant to the Private Securities Litigation Reform Act of 1994, and as such, speak only as of the date made.