This evening, the main spokesman, David Novelo, told us that DFC is not likely to recover its $30 million and the family will lose what he claims is $50 million in collateral for the loan, if the current problems facing the transportation industry are not resolved.

Novelo?s Bus Line Limited met its demise, he said, because (1) Government did not preserve their runs and began to give permits to various bus lines despite an agreement to freeze permits, (2) fuel costs rose too rapidly and government refused to award subsidies on fuel taxes for the industry, and (3) government has refused to let them increase bus fares. The problems have not gone away, he said.

Novelo? s main argument is that the reason why their company, Novelo Bus Line, fell into receivership, is because Government did not fulfill its promise to give the Novelo family a franchise that would given them control over the national transportation sector.

Now he claims that the new receivership management is running the company into the ground and causing rapid deterioration of the company?s assets, which still belong, legally, to the Novelo family.

Where it all got started, we are told, is five years ago when Eugene Zabaneh bought out Venus Bus from Froylan Gilharry, putting him in control of both the northern and the southern runs. Meanwhile, the Novelos controlled the west and it had bought out Batty?s for $5.6 million.

We asked Novelo whose idea was it to develop a national bus company. His replied: ?It was not the Novelo family?s idea. It was a private initiative from the Zabaneh group. When we sat down at the table, two possible scenarios were looked at: a merger, or buy-out.?

There were three to four months of negotiations, said Novelo, and they rejected the idea of the merger.

?Zabaneh offered to buy Novelo, but the family did not feel that the price was right,? he added.

The Novelos went to DFC for the $30 million to finance the buy-out of Zabaneh?s transportation assets and goodwill?that is, rights to all the road service permits that were granted to his bus lines.

Ordinarily, though, permits are granted on an annual basis, and there is no guarantee of renewal. Permits are subject to the approval of the Belize Transport Board.

Novelo said that negotiations began in 2001. At the time, the Minister in charge of transport was Dr. Henry Canton, who resigned in July, 2002. But it was Hon. Max Samuels, who later took up the portfolio, who signed the final agreement, Novelo added.

He said that transport officials had to be involved in the process, since the viability of the whole national transportation project and their ability to repay the loan was dependent on the 15-year contract Samuels gave them for a national bus franchise.

?So if you say now and the Government says it now that the franchise agreement is illegal, then therefore, they are saying that the 30 million dollars, you don?t have a responsibility to pay it, because for you to have been able to pay the 30 million dollars, the franchise agreement was the fundamental aspect to ensure that you would have that road preservation that was needed to pay back that debt,? Novelo further argued.

Interestingly, Novelo, too, had said in early 2003, when the contract was the subject of public scandal on the eve of general elections, that the contract was not valid. He said that they were told that for the contract to be legal, it would have had to be approved by the House.

Now, Novelo has changed his position. He told us, when we asked him about it, that subsequent legal advice has led him to adopt a new position.

?In the court of law, everything is set by precedent. And the Government of Belize issued exclusivity to the Royal Caribbean group for the Belize Tourism Village and that did not go through the House; that was not ?Gazetted,?? he reasoned.

As to what happened to the $30 million, Novelo gave us the following account: $15 million for Zabaneh; $1 million for Gilharry to manage Northern Transport for an additional year after buy-out; $2 million to Glenn D. Godfrey law firm (note that Godfrey was DFC?s chairman at the time); $5 million for buses; $1.8 million for spares and tire; .5 million for improvement of terminals; and $4.7 million for working capital.

What did they get for the $15 million paid to Zabaneh? Novelo told us that it got them Travelers Inn in Punta Gorda, the Dangriga terminal, a 5-acre parking lot at Mile 3 on the Stann Creek Valley Road, the Magazine Road terminal in Belize City, the Corozal terminal, 45 buses and ?goodwill,? meaning the road service permits.

But the Novelos complain that shortly after the buyout, Government reissued a road service permit to Gilharry to resume northern runs. This, he argues, is contrary to the franchise agreement Samuels had given them.

Was 15 million a reasonable price to pay for what you got, we asked.

?At this time, we look at it as reasonable,? he said. ??basically, you?re ending up with 98% market share.?

Today, no one company has that level of market share. In fact, just as the Novelos felt that that market share was necessary for them to repay DFC and Atlantic Bank, so now does the receivership management argue that new bus runs from the Novelo brothers under National Transport Services Limited impinge on their runs and make it hard for them to collect on the debt.

?At this point, what the family is doing is that we are taking a proactive approach in inviting DFC to sit down with us, because at the end of the day, the family wants to ensure that DFC can recover as much of its debt, but at the same time, the family needs to protect its 50 million worth of investment that we have at stake as well,? said David Novelo.

He added that if something were not done to fix the current problems in the transportation sector, everybody would lose: ?That $30 million will never be paid and the family, at the same time, has many things at stake. We have our 50 million dollar investment that we placed that will crumble and go to nothing? That means that the 44 million that we placed on the table as sureties and the 6 million cash, all of that will go then, and will go for 10 cents on the dollar and the remainder they will still come to us for.?

As to how the Novelo brothers can finance new bus ventures and put nice, well-painted buses on the road, David told us that they are being leased from the United States company, Southwest Bus Sales, for a year and a half at an interest rate of 10%.

With this commitment, it is unlikely that the Novelo brothers will back down from their attempts to get back into the public transportation business, despite an announcement Wednesday that they were discontinuing their western runs indefinitely. Transport authorities, according to the company, have impounded seven of those buses.