Avalon to Acquire Colorado Community Corrections Provider.

OKLAHOMA CITY--(BUSINESS WIRE)--April 27, 1999--

Avalon Correctional Services, Inc. (Nasdaq:CITY), a leading owner and operator of community correctional facilities and programs, today announced it has entered into a definitive agreement to acquire The Villa at Greeley, LLC., a private provider of residential services and programs for community corrections offenders located in Greeley, Colorado.

The all cash transaction is scheduled to close in the second quarter of 1999. Closing of the acquisition is subject to various conditions including completion of due diligence and consents of contracting agencies.

The acquisition will increase Avalon's annualized revenue to approximately $16 million. The Villa provides residential and healthcare services to over 300 individuals in addition to day reporting and specialized programming for over 560 offenders. One of the original owners will remain with the Villa to ensure a smooth transition and assist with the Company's future growth in the State of Colorado.

"The Villa at Greeley is recognized as a respected leader in community corrections in the State of Colorado," said Donald E. Smith, Avalon's CEO. "The Villa's excellent management team has developed and provided quality programming and residential services since 1984. Mr. Michael Brand, the Director of Operations and an owner of the Villa, will join Avalon's management team to assure the continuance of the quality of services provided by the Villa and extend Avalon's mission to provide effective programming for contract agencies."

Avalon Correctional Services, Inc. is a leading developer and manager of privatized community correctional facilities and correctional programming in the United States. Avalon provides a diverse range of programs and services to local, state, and federal government agencies. For more information about Avalon contact our web site at www.avaloncorrections.com or call 405/752-8802.

Certain statements in this release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "intend," "expect," "should," "would," and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating) or achievements to differ from the future results, performance (financial or operating) or achievements expressed or implied by such forward-looking statements. The above factors are more fully discussed in the Company's SEC filings.