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News Announcement                               For Immediate Release

For further information contact:
Douglas Bruggeman                               Joseph N. Jaffoni
Chief Financial Officer                         Jaffoni & Collins Incorporated
937/276-3931                                    212/835-8500 or rsc@jcir.com

                  REX FUNDS $11.5 MILLION EQUITY INVESTMENT IN
                           ETHANOL PRODUCTION FACILITY

           - Merrill Lynch Capital to Provide Senior Debt Financing -

Dayton, Ohio (September 29, 2006) -- REX Stores Corporation (NYSE:RSC) announced
today that it has made an equity investment of $11.5 million in
Levelland/Hockley County Ethanol, LLC ("Levelland/Hockley") as Levelland/Hockley
has met all conditions precedent, including obtaining financing for REX to
proceed with its investment. Merrill Lynch Capital, a division of Merrill Lynch
Business Financial Services Inc. (NYSE:MER), will provide the senior debt
financing to Levelland/Hockley.

On July 31, REX reported that it had entered into a contingent agreement to
invest an additional $11.5 million to $18.0 million in Levelland/Hockley, which
intends to construct an ethanol production facility in Levelland, Texas. The
$11.5 million equity investment announced today, along with REX's previously
announced $5 million convertible secured promissory note commitment, enables REX
to secure a majority ownership interest in Levelland/Hockley.

Levelland/Hockley has signed a design/build agreement with ICM, Inc., an
engineering firm focused on ethanol, and intends to commence construction of the
Levelland, Texas facility by November 15, 2006. The plant will have a design
capacity of 40 million gallons of ethanol annually.

This news announcement contains or may contain forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements can be identified by use of forward-looking terminology such as
"may," "expect," "believe," "estimate," "anticipate" or "continue" or the
negative thereof or other variations thereon or comparable terminology. Readers
are cautioned that there are risks and uncertainties that could cause actual
events or results to differ materially from those referred to in such
forward-looking statements. These risks and uncertainties include the risk
factors set forth from time to time in the Company's filings with the Securities
and Exchange Commission and among other things: the highly competitive nature of
the consumer electronics retailing industry, changes in the national or regional
economies, weather, the effects of terrorism or acts of war on consumer spending
patterns, the availability of certain products, technological changes, new
regulatory restrictions or tax law changes relating to the Company's synthetic
fuel investments, the fluctuating amount of quarterly payments received by the
Company with respect to sales of its partnership interest in a synthetic fuel
investment, the potential for Section 29/45K tax credits to phase out based on
the price of crude oil adjusted for inflation, and the uncertain amount of
synthetic fuel production and resulting income received from time to time from
the Company's synthetic fuel investments. As it relates to ethanol investments,
risks and uncertainties include among other things: the uncertainty of
constructing plants on time and on budget and the volatility of corn, dried
distiller grains, ethanol, gasoline and natural gas prices.

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