Cash transporter Armaguard receives $50m lifeline to stay afloat

Cash transporter Armaguard receives $50m lifeline to stay afloat

Linfox Armaguard and Prosegur merged last year to form Armaguard Group, Australia's only national cash-in-transit company.

As cash processing, storage and transport company Armaguard struggles with the consequences of an increasingly cashless economy, the Essendon Fields-based company has reached a deal with major banks and retailers to receive a $50 million lifeline over the next 12 months.

The company's risk of default has been an existential threat to physical currency-based commerce in Australia, as the country's only national cash-in-transit company following a merger between Linfox Armaguard and Spain's Prosegur last year.

Now known as Armaguard Group, the company is responsible for the distribution of bank notes and coins around Australia, as well as operating, monitoring and maintaining automatic teller machines (ATMs).

The agreement struck with the Australian Banking Association (ABA) alongside key banks and retailers will give Armaguard $50 million in financial assistance, subject to meeting monthly key performance indicators and other conditions. It comes after a series of roundtables led by the Reserve Bank of Australia to discuss the sustainability of the wholesale cash distribution system.

The deal also includes a commitment by the parties to work together to develop an independent pricing mechanism to support a sustainable cash delivery business in the longer term. 

The major users and cash operators are seeking to work together so that: 

  • the industry is economically viable, 

  • there are significant improvements in productivity and efficiency, 

  • there is a capacity to invest in the industry, 

  • the highest standards of safety and security are maintained, 

  • the public has access to cash at the lowest possible price consistent with the commitments of security and safety; and 

  • more efficient and predictable pricing is achieved through the development of an independent pricing mechanism.  

Armaguard executive chairman Peter Fox claims no other nation has major banks, retailers and key distribution companies working together to achieve a more efficient cash-in-transit industy.

"The parties recognise that the interdependency of the three elements of revenue support, efficiency and capital support must all be met. Armaguard has indicated its ongoing support to meet that objective including access to capital where appropriate," he says.

"This is not a contest between the parties. There are no winners and losers here.

" Armaguard is also leveraging the expertise of its other shareholder, Prosegur, which is one of the world’s leading cash companies."

ABA CEO Anna Bligh says the agreement will keep cash moving around the country and ensure it remains available to Australians wherever they live.

"The 12 months of financial support also gives Armaguard the necessary time to restructure the business and realise the benefits from their merger with Prosegur. It also allows all parties to work through possible long-term solutions for sustainable cash access into the future," she says.

The group of funders includes ANZ, Australia Post, Coles, Commonwealth Bank of Australia, National Australia Bank, Wesfarmers, Westpac and Woolworths Group.?

Negotiations were led under the auspices of the Australian Banking Association with authorisation from the Australian Competition and Consumer Commission. 

The agreement has been submitted to the ACCC for approval.

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