MR DIY buying foreign worker quarters in related party deal

• The units, located under the Centralised Labour Quarter (PAPA) project @ Balakong in Seri Kembangan, will provide suitable accommodation for the group’s foreign workers, the home improvement retailer said.

KUALA LUMPUR (Jan 5): MR DIY Group (M) Bhd is buying 80 units of purpose-built foreign worker quarters in Selangor for RM165,000 each, or a total of RM13.2 million.

The units, located under the Centralised Labour Quarter (PAPA) project @ Balakong in Seri Kembangan, will provide suitable accommodation for the group’s foreign workers, the home improvement retailer said.

“[The] Papa project @ Balakong is a purpose-built workers’ accommodation that caters to foreign and migrant workers from several industries across multi-national companies, small and medium-sized enterprises and human resource agents,” said MR DIY in a filing.

The group’s wholly-owned subsidiary, MR DIY Management Two Sdn Bhd, is buying the units from Y5 Development Sdn Bhd and U & Location Sdn Bhd.

Y5 is the developer of the PAPA project and is 46%-owned by U&Location, which is the proprietor and beneficial owner of the land the project is situated on.

The acquisition is deemed a related party transaction as MR DIY’s founders and major shareholders Tan Yu Yeh and his brother Tan Yu Wei are directors and shareholders of U&Location — with 96% and 2% equity interest in U&Location respectively. Yu Yeh is the executive vice-chairman of MR DIY.

Yu Yeh and Yu Wei are major shareholders by virtue of their interest in MR DIY’s largest shareholder Bee Family Ltd, which owns 4.79 billion shares or a 50.79% stake.

MR DIY said the acquisition was in line with the government’s effort to introduce centralised labour quarters to improve the living conditions of foreign workers.

“The acquisition would also facilitate the company in managing its foreign workers and their accommodation systematically as part of the welfare of our internal stakeholders under the sustainability initiative of the group.

“PAPA project @ Balakong is located near the key distribution centre of the company, which will save travelling time and reduce transportation costs for the foreign workers of the group,” it added.

The group said that according to a project assessment report by an independent valuer, the selling price of the PAPA project ranging from RM168,000 to RM178,000 per unit was fair and reasonable.

“The purchase consideration of the acquisition of RM165,000 per unit is a discount of 4.6% to the mid-point of the valuation range based on the project assessment report,” it noted.

Shares in MR DIY closed unchanged at RM1.99 on Thursday, giving the group a market capitalisation of RM18.77 billion.