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By Michael Ellis
DETROIT, Feb 28 (Reuters) - General Motors Corp. said on Friday it will contribute 150 million of its Hughes Electronics Corp. shares to its employee benefit plans, which are severely underfunded due to declining stock markets and soaring health care costs.
The contribution, worth about $1.5 billion at current market prices, will cut GM's operating expenses for its benefit plans in 2003. It will also reduce GM's economic interest in its wholly-owned Hughes unit to about 20 percent from 30.7 percent, GM said.
GM, the world's largest automaker, also said it filed an amendment to its universal shelf offering to increase the amount of securities covered to $10 billion from $5 billion. The filing opens the door to a broadening of the types of securities to include Hughes common stock and other related securities.
The filing, made with the U.S. Securities and Exchange Commission, also gives GM the right to occasionally sell up to $10 billion in securities.
GM said the change in the shelf offering gives the automaker added financial flexibility with Hughes, which several companies have expressed interest in. The company said it is evaluating a number of options that could reduce or eliminate its economic stake in Hughes, including transactions with investors or public offerings.
Several companies, including News Corp. , SBC Communications Corp. and Liberty Media Corp. are interested in acquiring all or parts of Hughes Electronics, the top U.S. satellite television company.
"We are actively reviewing all of our options regarding Hughes," GM spokesman Jerry Dubrowski said. "Whatever we end up doing with Hughes, it gives us the flexibility to pursue a number of transactions."
Last year, EchoStar Communications Corp. gave up its $18 billion takeover bid for Hughes due to fierce regulatory opposition.
With the transfer of the additional 150 million Hughes shares, expected to be completed in March, GM's employee benefit plans will hold about 330 million shares in Hughes.
GM has not decided how to allocate the shares to its employee benefit plans, spokeswoman Toni Simonetti said. GM's U.S. pension plan ended 2002 underfunded by $19.3 billion due to three years of stock market declines. GM's health care costs have also been rising dramatically.