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USi inks Microsoft, Aether deals, gets $300 mln

    USInternetworking Inc. (Nasdaq: USIX) popped 42 percent Tuesday after inking alliances with Microsoft (Nasdaq: MSFT) and Aether Systems (Nasdaq: AETH). The company also secured more $300 million in equity and credit financing.

    Shares of the application service provider rose 1.56 to 5.31 Tuesday.

    The company will partner with both Microsoft and Aether in strategic alliances.

    The deal with Microsoft will see USi develop, deliver, and market services using Windows 2000 and .NET as primary platforms. This includes all of Usi's iMAP product services. The new services are expected to be available in December of 2000, with additional releases through May 2001. Microsoft will provide USi with engineering and technical support, as well as some joint marketing.

    USi will team up with Aether to jointly develop and deliver wireless managed application services. The first product of the alliance, wireless e-mail and messaging using Aether's Blackberry service, is currently in the marketplace.

    As well, USi said it has obtained over $300 million in equity and credit financing, allowing the company to reach cash-flow break-even. As part of their strategic arrangements with USi, both Microsoft and Aether will make equity investments of $50 million and $10 million, respectively. An additional $60 million equity commitment will come from USi's early investors.

    The company also secured equity financing from Acqua Wellington North American Equities Fund Ltd, covering the sale of up to $140 million of USi's common stock . The equity purchasers will buy USi common stock at $3.40 per share. The equity investors will also receive a warrant to purchase 0.35 shares of common stock at $4.08 per share for every share of common stock they purchase in the financing.

    USi also obtained a $50 million three-year revolving line of credit led by GE Capital.