Coles has halted cash deliveries from Armaguard and imposed strict limits on withdrawal in supermarkets amid fears the currency handling company is on the brink of collapse.

It came as Armaguard, a subsidiary of Lindsay Fox’s Linfox, reportedly rejected a multimillion-dollar funding boost from a group of big banks and retailers.

The ABC is reporting that Armaguard had been given until the end of Thursday to accept or reject the funding lifeline. The deadline followed an emergency meeting on Wednesday chaired by Reserve Bank governor Michele Bullock and attended by former ACTU secretary and Linfox director Bill Kelty.

It is understood the company has turned it down. In a statement to the ABC, Armaguard Group chief executive Mick Cronin said the company was working with its customers to resolve its issues.

“Armaguard confirms it is working constructively with all its customers, including its retail customers, banks and other key stakeholders regarding both short-term and long-term financial solutions for the industry to remain sustainable,” he said.

“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.”

Coles has paused Armaguard cash deliveries until Friday, April 5, due to its concerns. The retailer has also slashed withdrawal limits at supermarkets and liquor stores from $400 to $200 indefinitely.

“Due to industry-wide challenges with cash movements, we are taking some temporary steps to prepare for disruption to Armaguard services,” a Coles spokesperson said.

The big four banks, Wesfarmers, Coles, Woolworths and Australia Post put their funding offer in the vicinity of $26 million to Armaguard on March 19.

The offer would have supported Armaguard to continue operating for about six months. It followed the company’s approach to retailers and banks in late October seeking a cash injection to keep providing distribution services after its merger with competitor Prosegur was approved.

Negotiations kicked off in earnest in December and there have since been dozens of meetings.

There was no expectation for the money to be repaid. But it did come with conditions, including an accountant to provide guidance on how to make the business viable.

The Transport Workers Union, which represents about 700 Armaguard workers, has called on the business’ clients to find a solution.

National secretary Michael Kaine said workers needed certainty heading into the Easter long weekend.

“The [union] is engaged in ongoing discussions with Armaguard to protect workers,” Kaine said.

Linfox has been approached for comment.

-with AAP