(Updates with comment from president of GM Europe)

BERLIN -(Dow Jones)- The governor of the German state of Hesse, where General Motors Co.'s Opel unit is headquartered, said Wednesday he is "concerned and at the same time annoyed that the months-long efforts to find a good solution for Opel have failed because of GM."

In a statement, Roland Koch, a confidant of German chancellor Angela Merkel, said that considering the "negative experience in recent years with GM's corporate policy, I'm worried a lot about the future of (Opel) and its staff."

In a surprise move, GM's board late Tuesday decided it wants to retain its core European operations after talks over a possible sale have been dragging on for months.

Koch said he expects GM to repay by Nov. 30 the bridge financing provided by the German state "so that the German tax payer doesn't get harmed."

In May, GM entered a tentative agreement with Canadian auto-parts maker Magna International Inc. (MGA) over the sale of a majority stake in Opel and its British sister brand Vauxhall, which was backed by a total of EUR4.5 billion in state aid.

The top labor representative of GM's European operations, Klaus Franz, told Dow Jones in an email that a labor deal over EUR265 million in annual cost savings isn't valid if the U.S. automaker is keeping Opel and Vauxhall after all. The labor unions' position remains unchanged, he said.

The agreed cost savings would have totaled nearly EUR1.6 billion by 2014. In return, Opel workers would have received a 10% stake as part of the planned deal with Magna.

The president of GM Europe, Carl-Peter Forster, said Tuesday that as part of a restructuring to turn Opel into a profitable company, up to three plants in Europe would have to be closed.

"Three is the maximum ... (but) zero (plant closures) isn't realistic," Forster said at the sidelines of an industry conference in Berlin.

He said the Belgian plant in Antwerp would be "the most difficult to keep".

Forster said Opel's cash position developed better than expected in recent months, but he didn't provide details.

He declined to comment on whether he expects to remain in charge of Opel and Vauxhall, adding that a final decision on the operation's future would have to be taken first before negotiating any personnel issues.

Company Web site: www.gm.com

-By Christoph Rauwald and Nico Schmidt, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com

(END) Dow Jones Newswires

11-03-09 1957ET