The Australian Competition and Consumer Commission (ACCC) has provided interim authorisation for a $50 million bailout of transporter Armaguard from the country’s biggest banks and retailers.
The ACCC approved the bailout on Wednesday.
The agreement, funded by the Commonwealth, Westpac, NAB and ANZ banks, along with Coles, Woolworths, Wesfarmers and Australia Post, means Armaguard will receive monthly payments for the next 12 months in exchange for efficiency and restructuring requirements.
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The monthly payments will come with other key performance indicators and can only be unlocked if Armaguard keeps up its end of the deal.
“At this time, we have only provided interim authorisation on the financial support aspect of this package,” Acting ACCC Chair Mick Keogh said.
“We consider that the financial assistance to Armaguard increases the likelihood of a more sustainable supply of wholesale cash distribution services as well as access to cash by businesses and members of the public across Australia.”
The ACCC is calling for submissions from interested parties about the operational sustainability and efficiency measures and the independent pricing mechanism aspects of the proposed conduct.
Keogh said he expects the Australian Banking Association (ABA), major banks and retailers and Armaguard to commit to “consulting with other affected parties in a meaningful way”.
He emphasised that the interest of communities across Australia, particularly those in regional and remote areas, need to be considered.
“We expect this would include affected parties being consulted and provided with transparency about any proposed measures before they are implemented,” Keogh said.
More information about the ABA’s application and how to make a submission by July 24 is available on the ACCC’s website.
Buying time
Armaguard is Australia’s sole distributor of banknotes and coins after merging with competitor Prosegur in 2023 and there are concerns the country’s cash economy would not survive if the company folded.
The deal buys time for the country’s biggest businesses to come up with a plan if Armaguard fails.
“No other nation has major banks, retailers and key distribution companies working together to achieve a more efficient cash-in-transit industry,” Linfox Armaguard executive chairman Peter Fox said.
“Armaguard has indicated its ongoing support to meet that objective including access to capital where appropriate.”
The Transport Workers Union national assistant secretary Emily McMillan welcomed the deal, saying 1400 workers were relieved to have some job security for the year ahead.
She said it was important for “wealthy banks and retailers” to ensure the long-term viability of cash-in-transit services.
“Regional communities and many in society still rely on cash transactions,” McMillan said.
Treasurer Jim Chalmers said the government had been working with the banks, private sector providers and others to ensure cash continued to circulate within the economy.
The deal comes three months after Armaguard rejected a $26 million deal from the banks, Woolworths, Coles and Australia Post despite being told the company was not financially viable.
Instead, its parent company Linfox, owned by billionaire Lindsay Fox, announced it would pump $10 million into the business as Armaguard worked to find solutions to its financial woes.
The new deal gives Armaguard the time to restructure its business following the Prosegur merger and allow it and its customers to work out a long-term solution, Australian Banking Association chief executive Anna Bligh said.
Concerns over Armaguard’s future prompted Coles to stop cash deliveries to its stores earlier this year, but the supermarket later reversed the decision.
It also reduced the amount of cash customers may withdraw in shops from $400 to $200, but there are no plans to unwind the change.