News: COL Australia's Armaguard secures funding from parent, rejects rescue deal

SYDNEY, March 28 (Reuters) - Australia's money transit provider Armaguard said on Thursday it had secured the funding needed to avoid insolvency from parent firm Linfox, easing concerns among top supermarket chains and banks about cash shortages over the Easter weekend.

Owned by billionaire businessman Lindsay Fox, Armaguard Group, had been in talks with major banks and retailers including Coles Group (COL) and Woolworths (WOW) to secure a last-minute, short-term funding deal that would keep its banknote distribution services functioning.

But after Linfox stepped in, Armaguard said it had rejected that deal.

"Armaguard continues to operate its full suite of services and is confident that over the coming months, it will get the business onto a long term sustainable footing with appropriate support from the industry," Armaguard CEO Mick Cronin said in a statement sent to Reuters.

Armaguard merged with rival Prosegur last year to create a near-monopoly that was supposed to prop up the industry. But despite the merger, Armaguard said its cash distribution business remained unsustainable amid a rapid shift towards cashless transactions.

Armaguard customer Coles said it was limiting cash withdrawals to $200 per customer over the Easter public holidays, which begin on Friday, even through its services from the cash distribution company had been fully restored.

"Customers can continue to pay with and withdraw cash at Coles supermarkets and liquor stores this weekend and ongoing," a spokesman said.

The Reserve Bank of Australia has said that with the declining use of cash for transactions, developing a sustainable model for cash distribution was complicated, but key.