Wolves gaffer Mick McCarthy has been a long-term admirer of the left-footed defensive midfielder and the two clubs have been in negotiations for a couple of months.
Ideally the manager would like to buy the 6ft 3ins Senegal international and St Etienne are anxious to do business, after being forced to sign the £1.75million-rated 26-year-old from Nantes on a permanent basis when they stayed up to satisfy a clause in the loan deal.
Although the French outfit were keen to sign the player permanently, their financial circumstances have changed and they are now prepared to sell.
Chief executive Jez Moxey told the Express & Star: "We're putting together a really good team and we'd probably like to bring one more in.
"Whether that deal is on loan is a possibility, but we may have to sell some players to raise some cash."
Wolves currently have 28 senior pros and are hoping to offload Andy Keogh, Stefan Maierhofer, Matt Hill and Greg Halford.