Transport industry officials and analysts were mystified Thursday by a statement by Paragon Capital Corp., a Connecticut-based investment firm, that it intends to launch a proxy fight to unseat the board and management of financially troubled Consolidated Freightways Inc.

Analysts surveyed by The Journal of Commerce said they weren't familiar with Paragon, and several questioned the company's statement that it intended to launch a proxy battle against CF.In a statement, CF confirmed it received a letter from Paul D. Young, Paragon chairman, threatening to wage a proxy battle to remove the board.

CF also said it rejected an offer by Paragon to buy its air freight subsidiary Emery Worldwide because the proposal "lacked credibility, substance and funding."

The statement did not mention when the Emery bid was made or when it was rejected.

Palo Alto, Calif.-based CF said Paragon's actions breached a confidentiality agreement in which both Mr. Young and Paragon pledged not to influence or control CF management or its policies.

CF said Paragon violated the Securities and Exchange Commission's rules and regulations and that it would "pursue all appropriate legal remedies" against Paragon and the principals involved.

CF stock was trading at $17.625 on the New York Stock Exchange Thursday afternoon, with little change and activity for the week. No major blocks had changed hands all week.

Roughly 70 percent of CF stock is owned by institutional investors such as pension funds. But Paragon's name does not appear on the list of investors, according to Spectrum, a service that tracks these trends.

Paragon is based in Ridgefield, Conn.

In a statement, Mr. Young criticized CF management, claiming it failed to revive its flagging less-than-truckload business, and that it lacked the resolve to stem continuing losses incurred by its Emery Worldwide air freight unit.

The red ink at Emery "affirms management's inability or unwillingness to affect the wasting of (CF) assets and further decline in shareholder value," Mr. Young said.

CF officials say that, regardless of Mr. Young's dissatisfaction, there is little he or his partners can do to effect such a radical change. Only four of the 12 directors are up for renomination next month, thus making it impossible for Paragon to control a majority of the board, CF said.

Under CF's bylaws, its board is staggered, so that only four directors can be renominated in any given year. The staggered board can be abolished only through amending the bylaws. Such a move would require a shareholder vote, which must be proposed months before the annual meeting.

This year's annual meeting is scheduled for April 27.

Mr. Young's office said he could not be reached for comment until today. The company also has an office in London that it operates under a different name. A secretary in the Connecticut office said she could not disclose the name or the location of the London office.

In his release, Mr. Young said Paragon "expressed interest" in buying Emery before it accepted CF's buy-out offer in February 1989.

The Wisconsin state investment board is CF's largest shareholder, owning 3.35 million of the company's 37 million outstanding shares.

CF lost $53.1 million in 1991, while its CF Motor Freight unit posted a 54 percent decline in operating income. Emery lost $83.5 million last year.


HEADQUARTERS: Palo Alto, Calif.

PRESIDENT & CEO: Donald E. Moffitt

1991 LOSS: $53 million

1991 REVENUE: $4.1 billion


CF Motor Freight (long-haul trucking)

Con-Way Transportation Services (regional trucking and intermodal services)

Emery Worldwide (domestic and international air freight)