Latrobe Brewing Co. soon could have a new owner if City Brewing Co. of La Crosse, Wis., reaches an accord with the union representing the Westmoreland County plant's 200 workers. City Brewing, the nation's fifth-largest brewer, and InBev USA, owner of Latrobe Brewing, said Wednesday they signed an exclusive letter of intent to negotiate a sale of the brewery. InBev and City Brewing will begin negotiating a final purchase agreement, according to a statement from InBev. No date is set to wrap up talks, which will remain confidential, InBev said. City Brewing three weeks ago halted plans to buy a Molson Coors Brewing Co. brewery in Memphis, Tenn., after union workers balked at contract concessions City Brewing was seeking. They included cuts in health care benefits, pensions and wages. Several union workers leaving the Latrobe Brewing plant yesterday expressed reservations about the potential sale. "We're cautiously optimistic because we haven't heard any details of their proposal to us at this point," said Steve Tulenko, an 18-year employee. Another worker said most had wanted a better-known and "union-friendly" buyer to step forth. Industry experts have mentioned other brewers: Boston Beer Co., the maker of Sam Adams beer; Pottsville-based D.G. Yuengling & Son; and Sierra Nevada Brewing Co., of Chico, Calif. Yuengling and Sierra Nevada spokesmen said they weren't interested. A Boston Beer representative hasn't responded to calls. Last month, InBev USA, a division of Belgian brewing giant InBev N.A., announced the sale of Latrobe Brewing's Rolling Rock and Rock Green Light brands to Anheuser-Busch Cos. for $82 million. Anheuser-Busch said it plans to brew Rolling Rock beer at production facilities in Newark, N.J. The sale did not include the Latrobe production facilities, which are scheduled to close July 31 if no buyer emerges. That would leave about 200 people jobless. "It's a positive development, compared to 24 hours ago. But it's too early in the game. We're willing to work with everybody to come in and help us save jobs," said Ken Ream, international representative for the IUE-CWA, the industrial division of the Communications Workers of America, which represents about 154 brewery workers. Ream said union officials expect to meet with City Brewing representatives within a week. Gregory Inda, chief financial officer for City Brewing, wouldn't talk specifics about the potential deal. But asked whether City Brewing would dismantle machinery and move it to Wisconsin, Inda said, "That would not be our intent." Gov. Ed Rendell planned to talk today to City Brewery officials about state incentives -- grants, loans or tax credits -- that might be available. "I am hopeful that this letter of intent will translate into a contract to purchase the company. This is not the final step, but it is a very good step in the right direction," Rendell said in a statement. U.S. Rep. John Murtha, a Johnstown Democrat who has also been involved in the situation, welcomed the news. "It's certainly a big step in the right direction and gives us all reason to be optimistic," Murtha said in a statement. But the potential deal raises more questions than it answers, industry experts said. "It surprises me a little that they were able to get the financing together, but it doesn't surprise me they are interested. I would guess they're seeking more contract brewing opportunities out there," said Harry Schumacher, editor and publisher of Beer Business Daily, based in San Antonio, Texas. Schumacher said City Brewing might be offering "less than the equipment is worth, maybe for a discount, because there's excess production capacity in the industry." He said City Brewing also has looked at ethanol production. Five years ago, City Brewing signed a 10-year agreement with Williams Bio-Energy, a unit of Williams Partners LP, based in Tulsa, Okla., to market and distribute about 30 million gallons of ethanol annually. Williams Partners produces, processes and transports natural gas and manages a wholesale power business. Ethanol, a renewable fuel, is used as a high-quality octane enhancer to reduce air pollution and improve automobile performance. City Brewing produces about 1.8 million barrels of beer annually, and it was the fifth-largest brewer in the United States in 2005, according to the Brewers Association. Latrobe Brewing has the capacity to produce 1.3 million barrels annually. City Brewing began operating in late 1999, a few months after the Stroh Brewery Co. closed the old G. Heilman Brewing Co. and sold Stroh's brands to Miller Brewing Co. The G. Heilman Brewing Co. traces its lineage to 1858. City Brewing brews its La Crosse Lager, La Crosse Light and City Lager beers, along with City Slicker Malt Liquor and a half-dozen seasonal beers. The company has a significant contract brewing business, producing beverages such as Arizona Tea, Mike's Hard Lemonade and Potosi Light for other companies.