American Homestar Corporation Adopts a Shareholder Rights Plan.

Business Editors

HOUSTON--(BUSINESS WIRE)--Feb. 10, 2000

American Homestar Corporation (Nasdaq/NM:HSTR) today announced that its Board of Directors has adopted a Shareholder Rights Plan (the &uot;Rights Plan&uot;), the adoption of which provides protection against unfair takeover tactics and should encourage anyone seeking to acquire the Company to negotiate with the Board of Directors. The Rights Plan is similar to plans adopted by many public companies and should provide a sound and reasonable means of safeguarding the interests of all shareholders should an effort be made to acquire the Company at a price that does not reflect its fair value. The Board is not aware of any efforts to acquire control of the Company at this time.

In connection with the adoption of the Rights Plan, the Board has declared a dividend of one preferred share purchase right for each outstanding share of the Company's common stock. Each Right, which is not presently exercisable, entitles the holder to purchase one one-thousandth of a share of Series B Junior Participating Preferred Stock at an exercise price of $30.00. In the event that any person or group (other than certain excluded persons) acquires or announces a tender offer that would result in the beneficial ownership of 15% or more of the outstanding shares of common stock, each holder of a Right, other than the acquiring person or group, will be entitled to receive, upon payment of the exercise price, that number of shares of common stock having a market value equal to two times the exercise price. In order to retain flexibility and the ability to maximize shareholder value in the event of unknown future transactions, the Board retains the power to redeem the Rights for a set amount.

The distribution of the Rights will be made on February 10, 2000, to shareholders of record at the close of business on that date. The Rights will expire on February 9, 2010. In conjunction with the distribution, details of the Rights are contained in a letter, which is being mailed to all shareholders of the Company. The Company is filing with the Securities and Exchange Commission a copy of the Rights Plan as an exhibit to a current report on Form 8-K. The description of the Rights Plan above is qualified in its entirety by reference to such exhibit.

American Homestar is one of the leading vertically integrated manufactured housing companies. The Company currently operates 13 manufacturing plants, 122 Company-owned retail sales centers, 12 joint venture retail sales centers and serves 67 retail franchisees and over 300 independent retail locations in 28 states. The Company also provides retail financing through its finance affiliate, 21st Century Mortgage, and provides insurance and transportation services to its customers.

This press release may contain certain forward-looking statements and information based on the beliefs of the Company's management as well as assumptions made by, and information currently available to, the Company's management. Words like &uot;anticipate,&uot; believe,&uot; &uot;estimate,&uot; &uot;should,&uot; &uot;expect,&uot; and similar expressions used in this press release are intended to identify forward-looking statements. Such statements reflect the current views of the Company with respect to future events and are subject to certain risks, uncertainties, and assumptions, including the risk factors described in the Company's most recently filed registration statement and Form 10-K. Should one or more of these risks or uncertainties materialize or should underlying assumptions prove incorrect, actual events or results may vary from those described herein as anticipated, expected, believed, or estimated.

For more information about the Company, visit its Website at www.americanhomestar.com.