DETROIT -- General Motors Corp. has put up a 49 percent stake in its former financial arm as collateral for a $4.1 billion revolving line of credit, the company said.
It also announced plans Wednesday to replace $1.1 billion in convertible securities with new unsecured convertible notes that mature June 1, 2009. The new notes have a later maturity date than the old ones, giving the company more liquidity, said spokeswoman Melisa Tezanos.
Both moves are part of the normal course of business under GM's restructuring plan, she said.
But David Healy, an analyst with Burnham Securities who owns some GM shares, said the credit line is likely a hedge against what could be a declining U.S. automotive market this year and a possible strike later this year by the United Auto Workers.
"I think they're going to be asking for health care concessions and some sort of further concessions from the union in negotiations, and it's going to be tough. I think they're preparing for that as well," Healy said.
Healy said he thinks GM is becoming more pessimistic about the auto market through the end of the year and is concerned about a truck sales drop due to high gasoline prices.
On Thursday, GM said in a regulatory filing that it still is talking with several potential buyers of its Allison Transmission business in another effort to strengthen its liquidity.
"GM management believes that a sale of Allison Transmission is probable, subject to union, regulatory, and other approvals," GM said in a filing Thursday with the U.S. Securities and Exchange Commission.
The credit line could be used for general corporate purposes including working capital, the company said in a statement. It will be secured by GM's remaining stake in GMAC Financial Services. Last year GM sold 51 percent of GMAC to a consortium of investors led by Cerberus Capital Management LP.
GM had $33.12 billion in long-term debt and $4.83 billion worth of short-term debt as of March 31, according to its first-quarter financial statements filed with the U.S. Securities and Exchange Commission.
The company has no plans to immediately exercise the credit line, Tezanos said. If exercised, the line would add to the company's short-term debt, she said.
____
On the Net:
General Motors Corp.: http://www.gm.com
Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
