Australia’s only secure cash-in-transit company is on the brink of collapse, which if it goes bankrupt could mean a rapid acceleration towards a cashless society.
Armaguard on Thursday rejected a $26 million bailout package put together by the major banks and retailers, saying it will instead rely on $10 million in additional funding from parent company Linfox.
The cash transit sector has had a monopoly since its merger with rival Prosegur last year, but is struggling as the use of physical cash is jettisoned in favor of convenient tap-and-go, card and electronic payments.
Supermarket giant Coles has halted all cash delivery services over Easter amid fears that if Armaguard were to go bust it could lose all the cash stuck in its trucks in transit.
Morning 3AW presenter Tom Elliot warned on his program on Thursday that a collapse of Armaguard would mean the movement of cash across the country would stop.
‘What would happen? “If a company like Coles can’t move money from A to B, they will no longer allow you to use cash in the supermarket,” he said.
‘You take cash out of a bank or ATM, how does the money get there? Well, an armored car has to drive him there.
“If Armaguard goes bankrupt, it would virtually mean the end of the money.”
Armaguard has accepted an additional $10 million in funding from owner Linfox to maintain the flow of cash through Australia
Numerous concerns have been raised about the shift to a cashless society, including the costs associated with each purchase, the reliance on electronic platforms that can be hacked or down, the loss of privacy offered by cash payments, and the difficulties faced by the elderly or people escaping domestic violence.
Coles said on Thursday afternoon it had resumed cash deliveries after Armaguard indicated it was confident it would remain financially viable in the long term.
Armaguard is a subsidiary of billionaire Lindsay Fox’s logistics company Linfox.
Coles had paused all currency orders until April 5 and reduced withdrawal limits from $400 to $200.
However, Armaguard deliveries to Coles resumed on Thursday afternoon, the report said.
“Coles can confirm that normal Armaguard fundraising and processing services have resumed,” a spokesperson confirmed.
‘Customers can continue to pay and withdraw cash from Coles supermarkets and off-licences this weekend and throughout the year.’
In late October, Armaguard approached some of the country’s largest retailers and banks to request a cash injection to continue providing distribution services after its merger with rival Prosegur was approved.
On March 19, the big four banks, Wesfarmers, Coles, Woolworths and Australia Post, offered a package worth around $26 million, including some conditions.
It was enough to support the company for about six months and there was no expectation that it would be repaid.
The group wanted an answer Thursday afternoon, but Armaguard reportedly rejected the offer after opting instead for a $10 million injection from Lindsay Fox.
The number of ATMs in Australia has dried up in recent years, with Armaguard’s ATMx network likely to disappear if it goes bust.
The cash transport company tried to reassure customers that it would continue to operate normally.
“Armaguard confirms that it is working constructively with all its customers, including its retail customers, banks and other key stakeholders, on both short and long-term financial solutions to keep the sector sustainable,” chief executive Mick Cronin said in a statement declaration.
“Armaguard continues to operate its full suite of services and is confident that the business will be placed on a sustainable, long-term footing with appropriate industry support in the coming months.”
It comes after Armaguard representative Bill Kelty met with Reserve Bank Governor Michele Bullock and senior Australian banking industry figures on Wednesday in a bid to find a solution to the company’s problems.
The Transport Workers Union, which represents around 700 Armaguard employees, called on the company’s customers to find a solution.
National Secretary Michael Kaine said workers needed certainty.
“The union is in ongoing discussions with Armaguard to protect employees,” Kaine said.
Linfox has been contacted for comment.
