The assets of optical transport player Polaris Networks have apparently ended up in the hands of its landlord, Silicon Valley real estate developer Carl Berg, according to the networking company's former CEO.

As part of the transaction, Surya Panditi has stepped down as CEO of Polaris. He tells Light Reading this was his own decision, made as a way to avoid conflicts of interest, as he'd handled the negotiations with other potential buyers and with Berg.

Polaris at one time had multiple offers on the table, Panditi says. One deal with Anda Networks Inc. seemed imminent as recently as last month, but then quickly collapsed (see Anda Closes In on Polaris and Source: Anda, Polaris Deal Is Off).

Every term sheet had one element in common -- the money offered "would not satisfy our outstanding debt," Panditi says. "The senior creditor was unwilling to accept the offers on the table, but was willing to put some money into the company and run it."

That creditor was Berg, CEO of Mission West Properties Inc. (AMEX: MSW), the landlord on the 55,000 square feet Polaris was leasing in southern San Jose.

Panditi says he isn't privy to Berg's plans, but would Mission West be interested in running an optical networking company? An intellectual property sale seems more likely.

One source familiar with the company says that's exactly what Berg's trying to do -- and that he's only retained two Polaris employees.

One potential buyer -- described by one source as a longshot -- is Eastern Research Inc., a New Jersey vendor of digital crossconnects and other access-network transport devices.

Eastern seems to think of themselves as a longshot, too. "We are not in any kind of discussions with Polaris at this point," says David Kamm, director of marketing.

It's an intriguing theory, though. Eastern is owned by the Allen Organ Co., which purports to be the largest seller of church organs in the world. So, Polaris could change hands to a real estate mogul and thence to an organ manufacturer. Next thing you know, Qwest Communications International Inc. (NYSE: Q) will swoop in with a higher offer. (Just kidding -- see Qwest: Twice Bitten, Not Shy.)

As one might expect of a Silicon Valley landlord, Mission West has had its share of post-bubble trouble. The company happened to be landlord to terabit-router startup and Polaris soundalike Pluris Inc., which Mission West ended up suing in 2001. Pluris would eventually shut down (see Pluris Shutdown Confirmed).

Polaris's annual base rent was $971,574, according to Mission West's recent 10-K filing with the Securities and Exchange Commission (SEC).

Polaris raised $77 million since 2000, but announced just two customers in its lifetime: McLeodUSA Inc. (Nasdaq: MCLD) and Xspedius Communications LLC (see Polaris Moons Over McCleodUSA ).

Panditi, meanwhile, appears ready to take a break from it all. In addition to leaving Polaris, he's also vacating his board seat at core router vendor Avici Systems Inc. (Nasdaq: AVCI; Frankfurt: BVC7), where he's been chairman since 2001. Panditi also did a short stint as CEO of Convergent Networks Inc. in 2002 (see Surya Panditi).

— Craig Matsumoto, Senior Editor, Light Reading