Months after a bailout collapsed, the eight largest customers of Linfox’s Armaguard have agreed to a $50 million injection to keep cash circulating.
Already a subscriber?Cash transporter Armaguard has sealed an agreement with the country’s largest banks and retailers to deliver the Linfox-controlled group an additional $50 million, assuring the distribution of bank notes and coins throughout the economy for at least a year., the new agreement, finalised over the weekend, will provide additional funding for Armaguard for a year from July 1 and is expected to be submitted to the competition regulator for approval on Monday.
The Australian Banking Association and Armaguard are expected to release a joint statement confirming the deal on Monday morning.The transaction was negotiated by former union heavyweight and Linfox director, Bill Kelty; Linfox executive chairman Peter Fox; and Armaguard CEO Mick Cronin. The ABA team was led by its chairman and NAB boss Andrew Irvine; CEO Anna Bligh; and head of policy Chris Taylor.
This recognises legal realities and the ongoing work needed to refine the model for the industry. Major banks, the supermarkets and other large retailers will discuss with Armaguard ways to reduce its cost base, such as reducing delivery frequency.While the banks pared back their demand for Linfox to open its books, they have received assurances that the fresh funding will not be shared with other Linfox companies.
The $50 million promised for the upcoming financial year will be paid in instalments subject to defined performance hurdles, as Armaguard aims to get $50 million of costs out of the business by realising merger synergies.Spain’s Prosegur is said to be playing a more hands-on role with the Linfox family to help strip out costs, given its experience in more than 20 markets where cash usage is also plummeting.
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