The seven-member board of directors of the Gresham Hotel group will meet today to agree a date for the extraordinary general meeting for shareholders which has been demanded by the Red Sea Hotel Group.

The Israeli hotel group, which is the single biggest shareholder in Gresham holding 28 per cent of its shares, has called for the meeting to remove four of the directors. It will nominate three individuals to represent its interests on the board.

At the Gresham Hotel a.g.m. last week, Red Sea blocked the re-election of three directors, reducing the board from 10 to seven members. It now wants to remove Gresham chairman Mr Sean Henneberry and two non-executive directors - Ms Laura Magahy and Mr Patrick Bourke. The group's business development director, Mr David Bunworth, will also come under pressure.

The board must agree to call an e.g.m. within the next 60 days and is likely to seek shareholder support to block Red Sea's demands. The board will also have to consider the potential for other bids to materialise.

A consortium, headed by former NCB Stockbroker Mr Nigel McDermott, has held tentative talks with the group about a takeover. A management buy-out may also be considered.

Gresham has refused to comment on speculation about a possible bid but has called on Red Sea to initiate an outright bid for the group to end the uncertainty for shareholders. Gresham's chief executive, Mr Patrick Coyle, has accused Red Sea of trying to seize control of the group without making a bid that can be considered by shareholders.

Red Sea chief executive Mr Amos Pickel said last week his group did not intend to use the e.g.m. to take control of Gresham. "The target is to make this company earn money and develop," he said. Red Sea has nominated three directors it wants to see appointed to the Gresham board. They are: Mr Pickel, Mr Harvey Soning, a UK property expert, and Mr Tom Byrne, a specialist in property finance who formerly headed Davy Corporate Finance.

Another shareholder, Monaco-based Mr Ian Isley, who holds 4 per cent of the company's shares, supported Red Sea's motion to block the re-election of the three directors - Mr Jerry Liston, Mr Paul McCracken and Mr Domenico Venosi - at the a.g.m. It is likely he will also support Red Sea's nominations for the board at the e.g.m. The Irish Takeover Panel recently rejected Gresham's claim that the two large shareholders were linked.