American Homestar Corporation Announces Private Placement of $51 Million in Senior Unsecured Notes.

HOUSTON--(BUSINESS WIRE)--Oct. 20, 1998--American Homestar Corporation (Nasdaq/NM:HSTR) today announced that it has completed the private placement of $51 million of senior unsecured notes with an average fixed rate of 7.24%, an average life of eight years, and a final maturity in September 2008. Warburg Dillon Read LLC represented and assisted American Homestar in this transaction.

The Company will use the net proceeds from this new debt to fund continued growth and for general corporate purposes. Pending those uses, the proceeds will be used to temporarily reduce borrowings under the Company's inventory financing line. The current impact on net interest expense for fiscal 1999 will be nominal.

Craig Reynolds, the Company's chief financial officer, said, "This senior unsecured debt adds to our long-term visibility by providing a substantial amount of growth capital under very attractive terms and conditions."

American Homestar is one of the leading vertically integrated manufactured housing companies. The Company currently operates 11 manufacturing plants, 103 Company-owned retail sales centers, and serves 56 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.