Novelo family bids for control of bus industry
The war of words between the Novelo brothers and the now defunct receivership that took over their failed bus company makes for high drama, not to mention high finance. At stake are both the public’s money and its need for transportation services. This morning I sat down with David Novelo as his family makes a concerted–perhaps desperate–bid to regain control of the nation’s highways.
David Novelo, Spokesperson, Novelo Family
?Even if we are to regain control of the bus line, that is not the end. The end is just the beginning because regaining control on this second round, you have to make ensure that you make it work.?
Janelle Chanona, Reporting
This week the Novelo family formally submitted its proposal to Minister of Transport Jose Coye and the Musa administration for a long-term solution to the chaos in the bus industry.
David Novelo
?We believe in this project, we want to put our heart and soul to make sure that it works the second time, but most importantly, we want to make it transparent… have national bus company that all of us can be proud of, guarantee the commuter service and at the same time, ensure that the creditors, the D.F.C., which is the people?s money can be salvaged, Atlantic Bank, and that the family could be vindicated as well.?
In 2001, the Novelos embarked on an ambitious initiative to become the dominant land transport provider in Belize. The family borrowed thirty million from the Development Finance Corporation, ten million from the Atlantic Bank, and six million from the Belize Bank.
Apparently, Atlantic bank?s ten million was spent in the family?s tourism company.
They maintain that the thirty million was spent as follows:
Fifteen million to Eugene Zabaneh to buy Z-Line and Venus Bus Line, including the terminals and the majority routes in the north and south. From the other half, one million was paid to Froylan Gilharry in a gentleman?s agreement, five million was spent on high-end buses, two million was paid in legal fees to Glenn Godfrey?s law firm, five hundred thousand was spent in upgrading infrastructure, and they bought one point eight million dollars worth of spare parts. That left, according to the Novelo?s math, roughly four point five million in working capital.
Things started to go wrong quickly, forcing the company to borrow six million more from the Belize Bank to keep the company afloat.
But in the end, the venture still failed miserably and the company went into receivership. Debts currently stand at forty-three million to the D.F.C. and seventeen million to the Atlantic Bank.
The Novelo family claims Belmopan?s actions, coupled with rising operational costs doomed any chance of success.
Janelle Chanona
?Some people looking at this would say, you got the thirty million from D.F.C., ten million from Atlantic, the six million from Belize Bank, you had your personal money in this as well. If you got all of that money and you couldn?t make it work, why should Belizeans believe it can work the second time when now you have less money, [and] you have all that money in debt??
David Novelo
?Because Janelle it is very simple to answer that question: the structural problems. Every business…?
Janelle Chanona
?But that?s not going anyway either, the situation is the same.?
David Novelo
?No, but it needs to be fixed. Because whether the Novelo family succeeds in taking over the national industry or does not, with the contemporary environment that exists, it will further continue on a worse setting because these structural problems is not only being affected on a big company, but even the small operators.?
?If you have fuel being at a certain price and what you are generating cannot cover and offset your operational costs, then that shows you that basically there is no viability in that business.?
?You stick with bussing because at this time, the family is already way in too deep in this business. You have all your assets, you have a situation whereby you have all the legalities, and the family still recognises that if there is the willpower of the government and the Department of Transport to fix and remedy these structural problems, it can be a viable business.?
Janelle Chanona
?If you are saying they didn?t keep their promises the first time around, what?s to guarantee you that they?ll keep their promises this time??
David Novelo
?Janelle, if you look at our new proposal, we are saying legislation. Legislation has to be…?
Janelle Chanona
?But you?re saying too that they are not good regulators. The legislation is there but they are not enforcing it.?
David Novelo
?But now the legislation has to be carried out in all steps: going to the House, being legislated and this is what will ensure government to maintain their end of the deal.?
Janelle Chanona
?But who is going to enforce regulation if it?s the same government in change of enforcement, the Transport Department, Traffic…?
David Novelo
?Because Janelle after what is said and done, I think the government has realised the effects not regulating, and because of not dealing with these structural problems, because of not allowing these ingredients to be a part into the mess it has gotten all of us, the commuters, the public people?s money, the creditors… so it has to be fixed. And the family believes that out of every situation there is always a light of hope because once things crumble, it can only get better, it can?t get worse.?
Today the Novelo family owns and operates another bus company, National Transport Services Limited, and even though interest on the D.F.C. and Atlantic loans continue to accrue daily, the brothers are only servicing the Belize Bank debt.
David Novelo
?We are taking all the monies that is being made out of N.T.S.L. and we are servicing that debt because if the Novelo family does not do that, you will have another creditor coming into default.?
Janelle Chanona
?But then why pick just the Belize Bank to start paying, why not spilt the monies that you are making between the three entities, just to be saying, well I?m paying back something.?
David Novelo
?Well you see, the family had to roster and the family had to reinvest in the acquisition of these National Transportation Services buses, and the money came from the Belize Bank.?
And while the Novelo brothers are planning a long future in the transport industry, they are anything but happy with the ruin of the company founded by their parents, Novelo Bus Line.
David Novelo
?The receiver is not brought in to destroy a company, in the case of the Kevin Castillo management receivership, what he did, he not only destroyed the equipment, he also took four companies illegally, which were not part of the whole amalgamation process.?
?The family basically has a slam dunk setting in terms when it comes to legalities, we have a right to first and foremost sue the receivership for taking four illegal companies, and secondly, for destroying our company. Thirdly, we have the opportunity to sue both Atlantic Bank and D.F.C. because it was a joint partnership that decided to bring the company into receivership.?
According to David Novelo, legal recourse would be taken as a last resort option as they are confident that industry players and government can sit down to engineer a long-term solution to the problems in the bus industry.
