on Friday it purchased a credit facility under which its satellite telephone affiliate Bermuda-registered Globalstar Telecommunications Ltd. had borrowed $500 million.

The purchase of that credit facility, which had been guaranteed by Loral, was financed by a new $500 million three-year secured credit pact Loral arranged with a group of banks. The terms and conditions on the facility remain unchanged.

Loral owns 40 percent of Globalstar, which provides telephone service using a network of low-orbit satellites. Globalstar has struggled with slow subscriber and revenue growth, and has been forced to draw down its credit line to fund operations.

The new facility is secured by the same collateral that had been used to secure Loral's guarantee of the Globalstar credit facility. Two satellites, and other assets, serve as collateral, Loral said.

This new financial arrangement "resolves the obligation of Loral's guarantee and does not diminish Loral's existing capabilities or resources,'' the company said.

Investors fear Globalstar will fail to meet certain March 31, 2001 revenue targets required under the loan covenants and it will fall into default, analysts said. If GlobalStar had defaulted under the previous loan from its banker, the lender could have called the loan or demanded the Loral satellites as payment.

Now that Loral has purchased the loan, it essentially becomes GlobalStar's lender and the fear of the satellites being called is lifted, analysts said.

Shares of Loral were unchanged at $5 on the New York Stock Exchange. Shares of Globalstar also were unchanged at $2-3/8 on Nasdaq.