WorldCom

(WCOM)

, the embattled telecommunications firm that has been removed from the

S&P 500

and has seen its debt rating slashed to junk status, calmed fears that it is facing a liquidity crisis reportedly by securing a $1.5 billion credit line.

WorldCom's lenders agreed to reduced the size of the credit line to $1.5 billion after the firm was stripped of its investment grade rating, the

Financial Times

said. The new facility replaces a $2 billion securitization program that allowed WorldCom to raise cash by selling its short-term receivables.

The Clinton, Miss.,-based company and its banks had faced a deadline of this Thursday to change the terms of the securitization program, after which the company could have faced a default.

WorldCom is also hoping to complete negotiations on a new $5 billion facility by next month, which would help to quell concerns about a possible bankruptcy filing.

WorldCom's stock has plunged in recent weeks as investors feared the company would have to borrow more money to pay off some $1.6 billion in debts, which come due next year. Concerns about the firm's insolvency began after it slashed revenue forecasts amid a sharp downturn in the telecom industry. But WorldCom is hoping that the new financing program will convince investors that it can survive.

In early afternoon trading Monday, WorldCom shares were up 13 cents to $1.49.