The deal is structured as a scheme of arrangement and requires 75 per cent of votes cast and more than half of the shareholders voting in number to succeed.
Mr Catalano,together with Thorney Investment Group billionaire Alex Waislitz,have built up a 14.33 per cent stake in Prime in recent weeks. Sources close to Mr Catalano say he is betting that some shareholders may not vote,causing the deal to fall over.
Those familiar with Mr Catalano's strategy said that if the scheme fails to succeed,he will push for an extraordinary general meeting to instigate a board spill and secure the appointment of a representative director.
The former Domain Group boss has repeatedly said he wants better terms from Seven to surrender his shareholding. He has raised concerns about the terms of the deal directly with Seven chief executive James Warburton in recent weeks,sources said. Despite this,Seven sources said the network did not anticipate raising its offer.
Mr Catalano has also encouraged Prime to walk away from the merger,which would result in Prime incurring a $600,000'break fee'.
Prime chairman John Hartigan said in a statement that he would"deal with the realities before any other scenarios".
The regional broadcaster has engaged advisory firm Morrow Sodali to help drum up support from shareholders ahead of the December 19 vote,with Mr Hartigan spending this week in Melbourne meeting with investors.