Bluefly pops on AOL deal

Bluefly, Inc. (Nasdaq SmallCap: BFLY) shot up 67 percent Monday after it announced a deal with with America Online, Inc. (NYSE: AOL) for placement in the Shop@AOL online shopping destinations.

According to a filing with the Securities and Exchange commission Monday morning, Soros Fund management has also agreed to buy $3 million worth of the company's senior notes and warrants.

Bluefly shares were up 1 15/16 to 3 1/4. It's good news for the Internet retailer of fashions and furnishings, which has seen its stock pared down from a 52-week high of 16 11/16. The company announced it had made progress in its second quarter, but warned that it has to pursue "strategic alternatives" because it's running low on cash.

The deal may also help save the company from the fate of Living.com, an Amazon.com (Nasdaq: AMZN) backed company which joined the ranks of the dot-com dead August 16, filing for Chapter 7 bankruptcy and closing its online store.

Under the new agreement, Bluefly.com will be a tenant on sites such as Shop@AOL, AOL.COM, CompuServe, Netscape, Spinner and Winamp online shopping destinations. In addition, Bluefly will be a silver tenant in the Kids & Baby Clothing and Accessories area and will make its over 200,000 items available through AOL's popular shopping search database.

Financial details of the deal were not released.