Hotel group Gresham has warned that it will not meet brokers' profit forecasts in the current year because of challenging trading conditions and the costs arising from the requisition of an extraordinary general meeting.

The company has also appointed chief executive Mr Patrick Coyle as joint chairman ahead of that meeting, which is due to take place on Thursday.

The move is designed to ensure the orderly conduct of Gresham's business in the event that current chairman, Mr Sean Henneberry, is removed from his position, Gresham said.

The extraordinary meeting has been called by Gresham's 28 per cent shareholder, Israeli property and hotel group Euro Sea Hotels.

It is proposing the removal of four of the board's current directors, including Mr Henneberry, and the appointment of three of its own nominees.

"Unless there is a majority vote of shareholders against the resolutions to be considered at the e.g.m., it will result, inter alia, in the current chairman being removed from the board and the possibility of the board being deadlocked on various operational and other issues," Gresham said in a statement, released after the stock market had closed last night.

The appointment of Mr Coyle, who will continue in his position as chief executive, is designed to ensure the orderly conduct of the business of the board and the company, it added. "Mr Coyle views this role as a temporary position and has stated that he intends to step down from the position of joint chairman in due course, if the resolutions are not passed or, alternatively, when a suitable replacement is agreed," Gresham said.

Although the company is already in receipt of proxy votes, given the large number of small shareholders on the Gresham register, it is very difficult to predict the outcome of the meeting in advance.

Mr Coyle will not receive any additional remuneration or other benefits for taking on the joint chairman's role.

Meanwhile, Gresham warned that it would not meet market forecasts for the current year.

Brokers are forecasting earnings before interest, tax, depreciation and amortisation (EBITDA) of €8.8 million in the current financial year which ends in January 2002.

"Trading conditions have remained challenging for Gresham in the first half in line with conditions in the tourism industry," the hotel group said.

"This, together with the costs arising directly from the requisition of the e.g.m. . . lead the board of directors to believe that stockbroker forecasts of profitability for the current year will not now be achieved."

It is understood that the cost of requisitioning the extraordinary meeting is between €0.5 and €1 million.

Aside from the cost of contacting shareholders and other administrative expenses, Gresham has hired AIB Corporate Finance to advise it.

Euro Sea Hotels said last night that it was at a loss as to how Gresham could say it was spending so much on the extraordinary meeting and the costs arising from it.

"We look forward to the chairman explaining to all shareholders at Thursday's meeting what those costs are," said a Euro Sea spokesman.