BY CLARKE CANFIELD

Associated Press Writer

PORTLAND -- The new head of FairPoint Communications said Wednesday the company will have to make some big changes to get out of its financial pinch, but he's optimistic it won't have to file for bankruptcy reorganization.

In his first day on the job, David Hauser acknowledged that FairPoint's reputation has been damaged by operational problems it has had since it took over Verizon Communications Inc.'s landline telephone and Internet business in northern New England.

He said fixing the company's problems requires restructuring debt, getting operations to run smoothly, cutting costs and listening to customers.

"I firmly believe I have a good shot at righting the ship," Hauser said in a phone interview from company headquarters in Charlotte, N.C.

FairPoint is now seeking to postpone a bond interest payment due in October on debts totaling $531 million. If it can't be put off, the company might seek alternative debt-restructuring plans, which could include bankruptcy, FairPoint said in a Securities and Exchange Commission filing last week.

"I have every intention of taking the steps we need to take without going through bankruptcy," Hauser said. "But that depends on other people also, like the debt holders."

FairPoint owns and operates 32 phone companies in 18 states, with a total of 1.7 million lines. Most of them are in northern New England, where last year it bought Verizon's assets in Maine, New Hampshire and Vermont for $2.3 billion.

Since taking total control of the Verizon system last winter, FairPoint has been plagued by customer service, billing and other operational problems.

The company's subscriber access line count fell roughly 200,000 in the 12-month period ending March 31. Now, with falling revenues brought on by a shrinking customer base and bill collection problems, the company says it might not be able to make its October interest payment.

If the company is forced into bankruptcy it would be able to restructure financially, which probably wouldn't have a direct impact on customers, said Andrew Hagler, director of telephone utility industries at the Maine Public Utilities Commission.

"It certainly wouldn't be a liquidation," Hagler said. "And in that context, continuing to provide service, continuing to bill for service and continuing to collect payment for service is entirely consistent with the interests of creditors."

Hauser took over as FairPoint's chairman and chief executive officer after working for 35 years at Duke Energy Corp., most recently as its chief financial officer. He replaces FairPoint co-founder Eugene Johnson, who retired Tuesday.