General Motors has put up a 49% stake in its former financial arm as collateral for a $4.1bn revolving line of credit, the automaker was reported to have said.

It also announced plans to replace $1.1bn in convertible securities with new unsecured convertible notes that mature on 1 June, 2009, The Associated Press (AP) reported. The new notes have a later maturity date than the old ones, giving the company more liquidity, spokeswoman Melisa Tezanos told the news agency, adding that both moves are part of the normal course of business under GM’s restructuring plan.

Burnham Securities analyst David Healy told the Associated Press that the credit line is likely a hedge against what could be a declining US automotive market and a possible strike later this year, when the three major US automakers begin negotiating new contracts with 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 reportedly said.

Healy also said he thinks GM is becoming more pessimistic about the new vehicle market to the the end of the year and is concerned about a truck sales drop due to high petrol prices, AP added.

GM has no plans to immediately exercise the credit line, Tezanos told the news agency.
The credit line, secured by GM’s remaining stake in GMAC Financial Services, could be used for general corporate purposes including working capital, the company said in a statement cited by the Associated Press. GM sold 51% of GMAC last year to a consortium of investors led by Cerberus Capital Management, the report noted.