Elliot Grandin has left Bloomfield Road and signed for Nice.
He has joined the French club on loan until the end of the season, with a view to a permanent move in the summer.
Nice have paid £200,000 now but must pay a further £700,000 at the end of the season to keep Grandin.
Holloway explained: “He has a family situation and he needs to go back. All the lads wanted me to help him out.
“We’ve done that and our dressing room is absolutely buzzing because the boy doesn’t deserve the family situation he has.
“We’ve managed to do a deal where we will get back all the money we paid for him; if we don’t, then we’ll get Elliot back in the summer.”