investors sighed with relief today after the long-distance giant put some weight behind claims last week that it was immune to a rumored cash crunch.

Sprint said this afternoon that it is "within the next few weeks" of closing a $1.5 billion revolving bank line of credit that Citibank and J.P. Morgan Chase are co-leading. The facility is unsecured and is structured as a 364-day credit line with a one-year term-out option. It is in the "final documentation stage," according to a company statement.

The announcement brings an end to trading floor rumors of last week that the company was having trouble renegotiating another bank facility to replace a $3 billion credit line that expires next month and another $2 billion credit line that expires next August. The rumors sent shares plunging more than 25% last week to $6.65 in intraday trading, its lowest level since 1988, despite the company's public insistence that it had enough cash to make it through the year and beyond.

Sprint stock rallied 59 cents, or 16.67%, to $4.13 during the afternoon trading session, after the company put out a statement about its pending credit line.

Last week the company rushed to put out fires after the rumors surfaced. While Wall Street observers largely discounted the rumors, some pointed out the ongoing liquidity pressures the company faces. By the end of the second quarter, the company reported a cash position of about $650 million and debt of $21 billion.

It said it currently has sources of liquidity in excess of $1.85 billion, a facility backed by the expected sales of its directory business that could net more than $2 billion, in addition to another line of credit based on its accounts receivables in its global markets business. So it seems that Sprint's facilities are far in excess of its cash outlay expectations of about $550 million for the rest of the year, with $450 million of that going to debt obligations.

Of some concern to Sprint investors is the accounts receivables-backed line of credit, which carries with it a ratings trigger that locks Sprint out of those facilities should the company's debt ratings be downgraded to junk. In a statement, the company said it is negotiating with bankers to remove such triggers, and said its progress may be announced within several weeks.

In what's becoming a more common scene of financial transparency, Sprint further pushed back the veils on other concerns that have sent its debt rating to near junk status. In spite of the slowing economy, Sprint says it will be able to report free cash flows of $1 billion by the end of 2003.

Those funds will be used to retire mature debt obligations of $1.4 billion next year, the company said. By 2004, Sprint said its free cash flow will exceed its debt maturity payments. It also told Wall Street that it has no intentions of drawing down its credit lines for the time being.