Sporting Gijon have accepted a bid from Birmingham for Michel, but have requested more time in which to find a replacement before finalising the deal.
Reports suggest the Blues will pay around €3.2million (£2.9m) for the 24-year-old midfielder, with a two-and-a-half year contract awaiting him at St Andrews.
The agreement with will see half of the transfer fee paid during the current transfer window and the remaining 50 per cent in 12 months time.
Sporting have also included a clause in the deal which will see them receive 10 per cent of any future sale.
"We have convinced the technical staff that this is for the best, because we have to improve the financial situation at the club," said Sporting president Manuel Vega Arango.
"I understand that (coach) Manuel Preciado was keen to limit damage to the squad, but this is what we have to do."
Speculation in Spain suggests Sporting will look to land Atletico Madrid's teenage playmaker Ignacio Camacho on loan to help cover the loss of Michel.