American Homestar Corporation Further Expands Its Retailing Operations Through a Joint Venture With HomeMax, Inc.

HOUSTON--(BUSINESS WIRE)--Feb. 25, 1999--American Homestar Corporation (Nasdaq/NM:HSTR) today announced that it has entered into a definitive joint venture arrangement with HomeMax, Inc., a subsidiary of Zaring National Corporation (Nasdaq/NM:ZHOM), and plans to close the transaction in early March. Terms of this planned transaction were not disclosed.

Under the joint venture arrangement, American Homestar will acquire 25% of the outstanding common stock of HomeMax from Zaring and will make a subordinated loan to HomeMax, convertible into another 25% of HomeMax's common stock. In addition, American Homestar will receive an option to acquire the remaining 50% of HomeMax's common stock after three years at a pre-defined price. Zaring may require, or American Homestar may elect, earlier exercise of this option if HomeMax meets certain performance goals within the three-year period. American Homestar also will manage and direct HomeMax's operations.

HomeMax currently operates 12 retail sales centers (called model home villages) in North Carolina, South Carolina and Kentucky. Each model home village features a 2,700-square-foot, state-of-the-art Welcome Center and decorated, furnished model homes displayed in an attractive landscaped environment. "Customers can relax and shop in a beautiful retail environment and select their homes from our exclusive designs," said HomeMax President Matt Massarelli. "We are proud to be associated with American Homestar and look forward to a productive, successful relationship to enhance shareholder value for both American Homestar and Zaring National Corporation."

Commenting for American Homestar, Craig Reynolds, the Company's Chief Financial Officer, said, "This joint venture will combine HomeMax's very distinctive marketing infrastructure with a broad range of superior HUD-code manufactured and modular home products from our four manufacturing plants in North Carolina and our three plants in northern Alabama. In addition, HomeMax will be an important source of business for American Homestar's growing finance affiliate and insurance operations. We are excited about expanding our retail presence in the region through this strategic alliance with HomeMax and welcome them as an important complement to the American Homestar team."

American Homestar is one of leading vertically integrated manufactured housing companies. The Company currently operates 14 manufacturing plants, 116 Company-owned retail sales centers, and serves 70 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. For more information about the Company, please visit our web site at www.americanhomestar.com.

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.