Hours left for Armaguard to clinch $26m funding lifeline

Space-Separated Links


Cash transport distributor Armaguard has just hours to accept an emergency funding lifeline as the embattled operator teeters on the brink of collapse.

Despite enjoying near-monopolistic conditions in the industry after it was approved to merge with its former rival Prosegur last year, Armaguard has struggled to remain financially viable and has sought a capital injection to ensure it maintains its operations.

But if a deal cannot be clinched, Australia’s largest retailers and banks, which rely on Armaguard for cash transit, will struggle to maintain their cash reserves.

Linfox has guaranteed the operations of Armaguard will continue through to April 3.

Negotiating with Armaguard are 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 maintains its operations.

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

In a letter dated March 26 and seen by NCA NewsWire, the ABA-led coalition issued an ultimatum that Armaguard respond to its offer by 3pm on Thursday, March 28.

In response to growing concerns over cash access, supermarket giant Coles will stockpile cash over the Easter weekend.

Coles has suspended all delivery services from Armaguard through to April 5 in the event that the company enters administration, leaving its cash stocks stranded.

But Coles has stressed that its customers will still have access to hard currency, with cash transactions continuing to be available in all supermarkets and liquor stores.

“We are not transitioning to cashless transactions,” a Coles spokesperson said.

“Due to industry-wide challenges with cash movements, we are taking some temporary steps to prepare for disruption to Armaguard services.”

Check-out staff at the retailer have been advised to accept card payments only in the event that reserves in store begin to deplete.

However, not all major retailers face a suspension of cash distribution services.

It’s understood rival supermarket giant Woolworths will continue to be serviced by Armaguard, which is 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 the emerging cash crisis, 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.

Armaguard has been contacted for comment.

Leave a Comment