GM taps remaining $3.5 billion in credit line to shore up cash

General Motors Corp (GM), burning through cash after three years of losses, will tap the remaining $3.5 billion of a revolving credit line as the crisis on Wall Street threatens to crimp companies’ ability to borrow.

The balance of the $4.5-billion line will go to help cover restructuring costs, GM said in a statement yesterday. The Detroit-based automaker said it also completed a $322 million debt-to-equity exchange.

“The disruption in the credit markets have been profound,’’ said Pete Hastings, a fixed-income analyst at Morgan Keegan & Co in Memphis, Tennessee. “GM has its own set of sizeable problems, but I think this was a liquidity play.’’

Banks have tightened lending amid the worst housing market since the Great Depression, and this week’s bankruptcy of Lehman Brothers Holdings Inc and government takeover of American International Group Inc may further curb access to credit. GM, the largest US automaker, has said it needs to raise $4 billion to $7 billion by selling assets and adding debt to ensure it has enough liquidity to operate through the end of 2009. GM has lost $69.8 billion since the end of 2004, its last profitable year.

“GM felt it was a very prudent thing to have the cash on hand to borrow at very attractive rates,’’ spokeswoman Julie Gibson said in an interview. “The timing was right, given the obvious instability in the financial markets.’’

The automaker’s shares rose $1.68, or 15 percent, to $13.08 yesterday in New York Stock Exchange composite trading.