Australian Banking Association chief executive Anna Bligh said Linfox’s cash injection was a welcome development.
“We welcome Armaguard’s commitment that they will continue to operate and have secured funds from their parent company to maintain their full suite of services,” she said.
After Armaguard approached businesses about needing financial support, the RBA convened several roundtables involving Treasury, the ABA, the banking sector and major retailers to present Armaguard with a bail-out offer.
“This offer of financial support was made in good faith to ensure the last major cash-in-transit company can continue to serve its customers,” Bligh said.
“However, it is entirely up to Armaguard to decide how to fund their business and the decision of the parent company Linfox to fund them is a welcome development. The banking sector remains committed to ensuring cash is accessible for customers.”
Armaguard has become increasingly unprofitable as banks remove ATMs and Australians increasingly lower their use of cash in favour of digital payment and banking. To secure cash supplies, banks and retailers scrambled to assemble a short-term funding lifeline. Linfox has previously indicated it was unwilling to provide further funding to Armaguard.
After the $26 million offer was pitched last Tuesday, the consortium penned a letter expressing confusion at Armaguard’s unwillingness to reach a deal.
“This approach undermines the spirit of good faith negotiations aimed at supporting the ongoing operation of your business,” stated the letter, dated Tuesday 26.
“Your team does not appear to have had a genuine commitment to ensure that any funding package could be agreed and approved by the ACCC before 27 March 2024, as Armaguard had requested.”
As the Thursday deadline loomed, Coles lowered cash-out limits from $400 to $200 and paused Armaguard deliveries until April 5. The supermarket has since resumed cash collection and processing in light of Linfox’s $10 million injection.
A meeting was held on Wednesday between the consortium and Armaguard and the Reserve Bank of Australia chair Michele Bullock. Linfox was represented by former Australian Council of Trade Unions secretary Bill Kelty, who is a board director of the logistics business.
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A source with knowledge of the meeting but unauthorised to speak publicly said it had become clear Armaguard had misled the consortium about the company’s financial position. The source said Armaguard’s rejection of the deal has damaged good faith negotiations, as Linfox’s commitment to funding Armaguard represented a reversal of its position from weeks ago.
Coles, Woolworths, Wesfarmers, and Australia Post declined to comment further.
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Source Agencies
