Waterfall Holdings has responded to European Leisure's attempts to seek the removal of Waterfall's auditors, Ernst & Young, at an extraordinary general meeting. An e.g.m. "would seem to be vexatious and a waste of Waterfall shareholders' money", it said.

Waterfall, a publicly quoted leisure group, has made a hostile allshare offer for the much larger European Leisure, but European Leisure is strongly opposed. Instead, it wants to merge with a third leisure group, Allied Leisure. Waterfall said it has "total confidence" in Ernst & Young.

European Leisure which controls 24 per cent of Waterfall confirmed it wants to call an e.g.m. to probe a £300,000 credit received by Waterfall as part of a renegotiated beer contract.

Waterfall has described European Leisure's performance as "lamentable". It has stressed that its "superior proposal" should be allowed to be considered "without the distraction of irrelevant and immaterial issues".