MODTE Modtech Holdings Inc. (MM)

Modtech Holdings, Inc. (Modtech) (Nasdaq:MODTE) has executed a non-binding term sheet for a private placement of equity securities in the aggregate amount of $11.7 million. Modtech will use the proceeds to strengthen its balance sheet and to offset the recent losses on the Heritage High School project. Pursuant to the term sheet, the investors will purchase shares of Modtech's common stock at $5.67 per share, based on 85% of the average of closing prices for the period from May 26, 2005, through June 2, 2005. Also included are five-year warrants to purchase additional shares equal to one-half the number of shares initially sold. The warrants will have an exercise price of $8.00 per share. The financing is expected to close in early July 2005 but is still subject to further negotiation and the completion and execution of a definitive purchase agreement. The investors include Peninsula Capital Management, Inc.; Peninsula Catalyst Management, Inc.; Gruber & McBaine Capital Management; other institutional investors; and certain members of Modtech's management and board of directors. About Modtech Holdings, Inc. Modtech(TM) is a leading national designer and manufacturer of modular buildings, both permanent and relocatable. In the school industry, the Company has advanced typical modular building technology to greater dimensions of flexibility and architectural integrity. Modtech(TM) has substantial product and geographic diversification throughout the southwestern states and a growing presence in Florida and Texas. Modtech's commercial and industrial buildings are sold to a diverse end-user market and may be leased through national, regional, and local dealers. The Company also designs and manufactures modular buildings to customer specifications for a wide variety of uses. Some statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the company to be materially different from any future results, performance or achievements expressed or implied by forward-looking statements. Refer to the Company's filings with the Securities and Exchange Commission for further discussion of such factors. The forward-looking statements are made as of the date of this press release and the Company assumes no obligation to update such statements.