Armaguard is seeking a new cash injection offer after rejecting a $26 million deal from the nation’s biggest retailers and banks.
On Thursday, the currency transfer business turned its back on the package from the Australian Banking Association, the big four banks, Woolworths, Coles and Australia Post.
Instead, parent company Linfox, owned by billionaire Lindsay Fox, will pump $10 million into business as Armaguard works to find solutions to its financial woes.
It is understood the business is seeking to negotiate a new way forward with the banks and retailers.
Armaguard chief executive Mick Cronin said the company rejected “the timing ultimatum” put forward by the group.
He was confident the business would get onto a sustainable footing within months as long as it had appropriate support from the industry.
Australian Banking Association chief executive Anna Bligh described the deal as a “generous” cash offer that had only been made only after Armaguard said it was in financial distress.
Concerns over the company’s future prompted Coles to stop cash deliveries to its stores until April 5, however 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.
AMP chief economist and investment strategy head Dr Shane Oliver believes a new deal will eventually be made with Armaguard as it’s unlikely the banks or the government would allow there to be no currency providers.
The company has a “near monopoly” after merging with competitor Prosegur in 2023 but it’s still hard to make a profit as fewer people use cash, he explained.
“In the very short term Armaguard does hold all the cards because it’s a virtual monopoly,” Dr Oliver said.
“But virtual monopoly or not, there’s less and less money to be made in that business and they’re saying on the brink.”
He said Coles’ decision to reduce withdrawal limits was part of the ongoing shift away from paying cash in favour of digital payments.
“It is a nuisance for them,” Dr Oliver said.
“They would be finding less and less of their customers want to use it.
“But it does present some difficultly for some people who are wedded to using cash if the ATMs close down in you suburb and your only alternative is the Woolies or the Coles to get cash out.”