American Homestar Corporation Completes Acquisition of R-Anell Homes.

HOUSTON--(BUSINESS WIRE)--Jan. 5, 1999--American Homestar Corporation (Nasdaq/NM:HSTR) today announced that it has completed the acquisition of R-Anell Custom Homes, Inc. and its related manufacturing operations -- Gold Medal Homes, Inc. and Gold Medal Homes of North Carolina, Inc. ("R-Anell"). Final terms of the transaction were not disclosed.

R-Anell, based in Denver, North Carolina, produces distinctive lines of high-quality, upscale HUD-code manufactured homes as well as modular homes. The company markets its homes under the R-Anell and Gold Medal brand names through a network of over 100 independent and American Homestar-owned retail outlets located primarily in North Carolina, South Carolina and Virginia. R-Anell operates two modern manufacturing centers in Denver, North Carolina, and has recently opened a new, 250,000-square-foot, state-of-the-art manufacturing center in Cherryville, North Carolina. The Cherryville operation, located on a 120-acre site, houses two complete assembly lines and has the capacity to produce 100 floors per week. R-Anell's 1998 revenues were approximately $78 million and the company is currently operating at an annual rate of over $90 million in revenues.

Commenting on the completion of this acquisition, American Homestar President and Co-Chief Executive Officer Laurence A. Dawson, Jr. said, "We are extremely pleased to welcome the talented and proven R-Anell team as part of our growing American Homestar family. We now have five production lines and a growing retail distribution base in this important regional market; in addition, we are now solidly represented in the modular home segment. As we continue to execute our vertical integration strategy in this region, these new manufacturing operations will benefit through increased demand, production and efficiencies."

R-Anell President and Chief Operating Officer Dennis Jones said, "We recognize the long-term benefits of a strategic alliance with a high-growth, vertically integrated company like American Homestar. We have the resources to produce a full line of manufactured and modular homes and to effectively support our independent dealers as well as the Company's product needs throughout the region."

American Homestar is one of the leading vertically integrated manufactured housing companies. The Company currently operates 14 manufacturing plants, 110 Company-owned retail sales centers, and serves 65 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 "anticipate," believe," "estimate," "should," "expect," 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.