GM issues 16 mln shares in exchange for debt

DETROIT, Sept 29 (Reuters) - General Motors Corp GM.N said on Monday it had issued 16 million shares of common stock to an institutional shareholder in exchange for $176.4 million of convertible notes, reducing interest costs.

GM, which has faced intense scrutiny of its finances under the backdrop of the U.S. financial market turmoil, said in a federal regulatory filing that it would consider additional exchanges.

The automaker in mid-July announced plans to improve its liquidity by about $15 billion to support its business through 2009, including about $10 billion of cost cuts and $5 billion worth of asset sales and borrowing.

GM said it issued the stock on Friday in exchange for the notes due in 2009. The exchange price was based on a weighted average of daily volume over a 3-day period.

GM received no proceeds from the exchange, but the agreement will reduce its debt and interest costs and increase equity, improving liquidity, it said. (Reporting by David Bailey, editing by Richard Chang)