Home Manufacturer With Finance Affiliate Seeks Wider Horizons

American Homestar Corp. is quietly arming for battle in the fast- growing market for manufactured housing. And its lending capabilities may be among its best weapons.

The Houston-based company produces, retails, and finances manufactured homes through operations in Texas, Louisiana, New Mexico, Oklahoma, Colorado, Arkansas, and Kansas. But it appears to be gearing up for a nationwide offensive.

American Homestar, like other companies in the manufactured-housing industry, has found that providing financing for homebuyers is one key way to get ahead.

In September, the company entered the lending market with the formation of 21st Century Mortgage Corp. The financing operation is a partnership with competitor Clayton Homes.

American Homestar "is a company poised to catch up with Oakwood and Clayton Homes and be one of the biggest players in the industry," said William Stephens, analyst for George K. Baum, Kansas City, Mo.

Last week American Homestar announced a stock offering intended to help fund its growth. The offering is expected to total 1.5 million shares of common stock.

"It's like having a line of credit," said Don Adam, corporate controller for American Homestar.

That may come in handy; the company has an option to purchase Guerdon Holdings Inc., a Portland, Ore.-based builder of manufactured homes.

Guerdon has four factories and 165 independent dealers in the Pacific Northwest, Mountain States, and Southeast. The option expires in November.

Currently, about half of American Homestar's 43 company-owned retail centers use 21st Century Mortgage to finance home purchases. By August of this year, Mr. Adams expects all retail centers to be using the affiliated financing company.

Additionally, in late February, the company announced the acquisition of the assets and operation of three manufactured-home retail centers in El Paso.

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