Banks, retailers and Australia Post have agreed to an additional $50 million over a year in funding for Armaguard.
The Australian Banking Association labelled the agreement with Armaguard as “a 12 month financial contribution for its cash-in-transit business.”
“The agreement will see Armaguard receive approximately $50 million in financial assistance over the next 12 months, subject to meeting monthly key performance indicators and other conditions. It also includes a commitment by the parties to work together to develop an independent pricing mechanism to support a sustainable cash delivery business in the longer term.”
The agreement comes after a series of roundtables led by the Reserve Bank of Australia to discuss the sustainability of the wholesale cash distribution system.
The ABA said “the major users and cash operators are seeking to work together so that:
• the industry is economically viable,
• there are significant improvements in productivity and efficiency,
• there is a capacity to invest in the industry,
• the highest standards of safety and security are maintained,
• the public has access to cash at the lowest possible price consistent with the commitments of security and safety; and
• more efficient and predictable pricing is achieved through the development of an independent pricing mechanism.”
“This is not a contest between the parties. There are no winners and losers here,” Linfox Armaguard executive chair Peter Fox said.
“No other nation has major banks, retailers and key distribution companies working together to achieve a more efficient cash-in-transit industry. Armaguard is also leveraging the expertise of its other shareholder, Prosegur, which is one of the world’s leading cash companies,” said Fox.
“This deal will keep cash moving around the country and ensure it remains available to Australians wherever they live,” ABA CEO Anna Bligh said.
“The 12-months of financial support also gives Armaguard the necessary time to restructure the business and realise the benefits from their merger with Prosegur. It also allows all parties to work through possible long-term solutions for sustainable cash access into the future,” Bligh said.
Armaguard will be subject to monthly review and reporting by KPMG.
“The parties recognise that the interdependency of the three elements of revenue support, efficiency and capital support must all be met. Armaguard has indicated its ongoing support to meet that objective including access to capital where appropriate,” Fox said.
The group of funders are ANZ, Australia Post, Coles, Commonwealth Bank of Australia, National Australia Bank, Wesfarmers, Westpac and Woolworths Group. Negotiations were led under the auspices of the Australian Banking Association with authorisation from the Australian Competition and Consumer Commission.
The agreement has been submitted to the ACCC for approval.
This is the parties’ third attempt at a funding deal.