WorldCom

(WCOM)

rallied Wednesday as the big telco drew down a bank line, saying the move came as it "continues positive negotiations with its lenders on a larger, securitized credit facility."

WorldCom said it drew down a $2.65 billion bank line "in coordination with its lead banks ... to preserve its term-out option under the facility until June 2003." WorldCom said it is also on track to put a new receivables financing package in place by next week. The company's stock rose a dime to $1.34 on volume of a staggering 270 million shares.

WorldCom shares have plunged in recent weeks as investors fretted that the cash-strapped company would default on some of its $32 billion in debt. Just in the last three weeks the company has slashed its 2002 cash-flow estimate by $1 billion, pushed longtime CEO Bernie Ebers out the door in a bid to restore investor confidence, and suffered a debt-rating downgrade that briefly raised fears of a cash squeeze. Throughout, WorldCom has insisted that it has enough cash to keep its business going.

"This is an important next step in the process of bolstering our primary bank credit facilities and maintaining the Company's strong liquidity position and financial flexibility," said Scott D. Sullivan, WorldCom's chief financial officer. "We intend to repay these funds once we close on the new credit facility, which is on schedule to be in place in June 2002."