Veteran distie Northamber is a lot less cash rich after stumping up £6.35m to buy the freehold of its warehouse in Weybridge, Surrey.
The lease was set to run for another two and a half years, but the oldest IT trade wholesaler in the UK said that in recent weeks the current owner of the premises had initiated a sale on the back of interest from a property developer.
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Northamber, which recently named John Henry as its second MD in 30 years, is in an unusual position for a UK distie in that it is debt free and has £13.2m cash reserves sitting in the bank, gathering dust and relatively little interest.
London Stock Exchange-listed Northamber apologised to shareholders for being unable to seek their approval before inking the deal but said "commercial pressures" meant it needed to "secure the purchase of the premises in short order".
The firm said that the property, sitting on five acres of land with a building that has 77,600 sq ft, was worth £6.3m according to an independent valuer.
Buying the freehold means Northamber will not only avoid expensive relocation costs, it will no longer shed £601,000 a year in rent. It will "convert current assets into tangible and value retaining fixed assets".
"In the opinion of the directors, the undertaking to purchase the premises was a sound commercial and financial decision for the benefit of the company," it said in a statement to the LSE.
In results for the half year to 31 December, the distributor saw sales slide by 20 per cent to £53.8m, a far cry from its heyday in the 1990s when turnover breached the £300m barrier. Operating losses were £487,000 compared to a profit of £75,000 the year before. ®