FairPoint Communications is asking Maine utility regulators if it can hold off on a scheduled $11.25 million debt payment due at the end of March, a strategy meant to help conserve cash during a challenging economic period.

The request comes as FairPoint's board last week suspended quarterly dividend payments to investors, another move meant to manage cash flow.

Maine's largest phone company, FairPoint is struggling to normalize operations after taking over Verizon's landline business in northern New England last month. The transition to a new billing system delayed sending out bills, and that could reduce available cash during the first half of this year, according to the company's latest financial report.

But tight finances don't threaten FairPoint's survival, according to Gene Johnson, chairman and chief executive officer.

In an interview Wednesday with the Portland Press Herald, Johnson said the debt payment waiver is a one-time request and that operations will stabilize by summer. A planned expansion of high-speed Internet service is ahead of schedule, he said, and the current cash crunch won't keep the company from meeting its obligations to customers.

"We're just not doing it as fast as we'd like," he said.

FairPoint's purchase last year of Verizon's assets for $2.3 billion was controversial in part because the company borrowed heavily to close the deal. As a condition of approving the sale, the Maine Public Utilities set a timetable aimed at reducing debt and making the company more financially stable.

That timetable requires FairPoint to make quarterly debt reduction payments, the first by March 31. But in a filing at the PUC, FairPoint is asking to postpone the first payment until June 30, a date agreeable to its lenders.

FairPoint will seek to pay down $11.25 million in debt in June. It's pledging to resume regularly quarterly payments after that.

FairPoint argues that business conditions have changed significantly since it agreed to the PUC's conditions last winter. Changes include the loss of $30 million in revolving credit with the Lehman Brothers investment bank, which went bankrupt; the general deterioration of the economy; and a costly delay in taking over Verizon's network.

FairPoint is making similar requests to regulators in New Hampshire and Vermont.

FairPoint now operates roughly 1.6 million customer lines in Maine, New Hampshire and Vermont. It has had to scale a tall mountain to get these assets.

The systems cut-over from Verizon was delayed for months to straighten out problems with E-911 service, among other things. When FairPoint finally took over Verizon's network on Feb. 9, it had 24,000 service orders waiting and has yet to get through all of them.

Meanwhile, the economic forces hammering Wall Street have eroded most of the value of FairPoint's stock over the past six months. Shares were trading Wednesday near 38 cents, down from more than $11 a year ago.

Some stock analysts have noted that the company faces challenges to hang on to customer lines and handle high debt while integrating Verizon's network.

In this environment, FairPoint's board voted last week to suspend the quarterly dividend to investors. That will free up $93 million on an annual basis. Johnson declined Wednesday to specify how the cash would be used, except to say it could help pay down debt. It won't be used for operating expenses, he said.

In approving the sale, regulators last year ordered FairPoint to reduce dividend payments to shareholders if certain debt ratios weren't achieved. That seemed like a strong threat in early 2008; no one contemplated that the company would voluntarily eliminate the entire dividend.

Asked what will happen if state regulators deny the request to delay debt repayments, Johnson said the company can come up with the money.

"It would just make cash a little tighter in the short...