WorldCom to Tap $2.65 Billion in Credit

WorldCom Inc., the No. 2 U.S. long-distance telephone and data services company, said it will tap a $2.65-billion bank credit line, gaining a cash cushion and bargaining leverage as it negotiates with lenders on a new, larger credit pact. The move will give WorldCom extra time as it tries to line up $5 billion in loans that will be secured by the company’s assets.

As WorldCom taps the $2.65 billion, which is unsecured, its banks become exposed to any potential deterioration in its finances or a further downturn in the volatile telecom sector. Analysts said that puts more pressure on the banks to give WorldCom the new $5-billion credit line because the company would put up its assets as collateral and repay the $2.65-billion loan. WorldCom expects to get the new funding in June.