Armaguard rebuffs $26m funding lifeline after securing Linfox capital injection

Cash transport distributor Armaguard has rebuffed a $26 million emergency funding lifeline lobbed by the big four banks and major retailers to maintain its operations, with the company securing funding elsewhere.

Despite enjoying near-monopolistic conditions in the industry after it was approved to merge with its former rival Prosegur last year, Armaguard has claimed in recent months it would struggle to remain financially viable unless it received further support from its customers.

The warnings consequently prompted fears that the cash reserves of Armaguard’s clients would be severely depleted.

But on Thursday, the company said its parent, Lindsay Fox-owned transport and logistics giant Linfox, had guaranteed its continued operations via additional funding.

The decision represents a dramatic u-turn on Armaguard’s previous claims, with the firm formerly stating that Linfox did not want to provide funds.

“Armaguard confirms it is working constructively with all its customers, including its retail customers, banks and other key stakeholders, regarding both short-term and long-term financial solutions for the industry to remain sustainable,” Armaguard chief executive Mick Cronin said on Thursday.

“Armaguard continues to operate its full suite of services and is confident that over the coming months, it will get the business onto a long-term sustainable footing with appropriate support from the industry.”

Armaguard had previously been negotiation with a conglomerate of major retailers, including Coles, Woolworths and Wesfarmers, alongside Australia Post and the big four banks.

Led by the Australian Banking Association (ABA), the group has lobbed an emergency funding package worth $26m to ensure the embattled cash distribution service maintained its operations.

Reserve Bank governor Michelle Bullock chaired the negotiations, with a meeting held between the parties as recently as Wednesday.

It is understood Armaguard has still not formally informed the ABA-led coalition that it has rejected its offer.

In response to the revelation, supermarket giant Coles said customers at its supermarkets and liquor stores would be able to access cash as usual.

“Coles can confirm that normal cash collection and processing services from Armaguard have resumed,” a Coles spokesperson said.

Customers can continue to pay with and withdraw cash at Coles supermarkets and liquor stores this weekend and ongoing.”

Check-out staff at the retailer had previously been advised to prepare to accept card payments only in the event that reserves in stores began to deplete.

Meanwhile, rival supermarket giant Woolworths was not expecting any changes to cash withdrawal and payment options over the Easter long weekend.

On Thursday morning, the Transport Workers’ Union, which represents Armaguard drivers, weighed into matter, demanding that the big four banks should be levied to ensure distribution services were retained.

“Banks have been squeezing this industry for years. That’s bad enough when the industry is thriving, but at a time of crisis there is no room for penny-pinching on transport costs,” TWU national secretary Michael Kaine said.

“This is not about a lifeline to a struggling transport operator, it’s about client responsibility and banks paying what it takes to keep cash in service – something Australia needs.”

According to the RBA’s analysis, cash usage has declined markedly in recent years, falling from 62 per cent of total payments in 2021 to just 13 per cent in 2021.

The sharp fall in cash usage has meant that delivering a smaller number of bank notes across the economy has become increasingly unviable, with the trend expected to continue.