Auto Knight

GM Taps $3.4 Billion Credit Line

by Darren

GM wants to make sure they have enough money to continue operations, despite the ongoing credit crisis.

The company announced they’ve drawn down the rest of a $4.5 billion credit line they established with bankers two years ago.

The collateral for the credit consists of North American accounts receivable and inventory of GM, Saturn Corp., and General Motors of Canada; plants, property, and equipment of General Motors of Canada; and 65 percent of the stock of the indirect subsidiary General Motors de Mexico.

GM chairman and CEO Rick Wagoner told the Associated Press that the company exercised the credit line as a defensive move to preserve liquidity in case the credit markets continue to be tight. “These are very unsettled times in the market, and we just thought that under the circumstances it made sense that we would have that money in case that we needed it,” Wagoner reportedly said Thursday at a ceremony to announce a new Flint, Michigan, engine plant.

GM is in the midst of using a number of initiatives to increase their cash position, including cutting costs and selling assets. The company has been hurt very hard by a slowdown in North American sales of autos and trucks.