If the two clubs cannot reach an agreement on the fee to be paid for the 22-year-old then it will be left for an independant tribunal to decide what compensation the Foxes are to pay Forest.
“Leicester’s offer was derisory, there’s no other way to describe it," Forest Chief Executive Mark Arthur told his clubs official website.
"We made Gareth a very good offer to stay at The City Ground and are disappointed he has decided to move on.
“If the matter has to be decided by a tribunal we will be looking for compensation of between £3-5million and Leicester’s offer was way out.”