By Richard Fletcher and Rowena Mason in Reykjavik Last Updated: 11:57AM BST 13 Oct 2008  It would have been pretty difficult to miss Sir Philip. The airport – normally full of luxury planes – had remained virtually empty for several days as the financial crisis engulfing Iceland raged.  The lack of traffic had even sparked rumours that many of the country’s leading entrepreneurs had skipped the country.  As Sir Philip disembarked from the 16-seat jet – a $30m (£17.5m) Christmas present from his wife Tina – and climbed into his waiting car his mobile phone rang.  “What are you doing in Iceland,” asked one of the dozens of UK journalists who had made the rather rundown Hotel Loftleidir that overlooked the airport their home in recent days.  The retail billionaire had flown in to meet Jón Asgeir Jóhannesson, the chairman of beleaguered Icelandic investment group Baugur.  The waiting car whisked Sir Philip to the 101 Hotel, off the main shopping street in Reykjavik – a venue designed by Mr Jóhannesson’s wife, Ingibjörg Pálmadóttir.  Although it resembles a pebble-dash prison from the outside, the lavishly decorated hotel is the most expensive in Reykjavik, a hang-out for millionaires and their hangers-on.  Sir Philip also met officials from the Icelandic government, including the country’s finance minister.  Following the nationalisation of Iceland’s banks, much of the debt used by Baugur to acquire UK retailers such as Oasis, Warehouse, Principles and Karen Millen is now controlled by the government.  Baugur and Sir Philip are working on a plan which would see him buy the debt from the government – providing Iceland with much needed funds and Baugur certainty about its future funding. The billionaire retailer is also expected to inject working capital into the business.  Sir Philip and Mr Jóhannesson know each other well, with both men owning a string of high street UK brands. There are numerous business connections: not least the fact that Baugur still owns the Top Shop franchise in Iceland and Sir Philip runs concessions in the Icelandic controlled House of Fraser.  The pair have also socialised together. In better times Sir Philip and Mr Jóhannesson would attempt to outdo each other at the retail industry’s annual fundraising dinner – bidding hundreds of thousands of pounds in the charity auction for lots they would later donate back. The charity auction raises millions every year for the Retail Trust.  By Saturday morning Sir Philip had left Iceland to return to Monaco – where he spends his weekends with his family – although advisers remained to carry out due diligence.  Talks between Sir Philip, Baugur and the Icelandic government continued by telephone, although it is still not clear whether a deal can be done.  Sources close to the talks warned that any deal is reliant on the support of both the Icelandic and British governments. They also warn that the due diligence is not easy.  The proposed bail-out is not the first time that Sir Philip and Baugur have worked closely on a deal. In 2002 Baugur struck a deal with Sir Philip to swap its 20pc stake in Arcadia for the Top Shop, Top Man and Miss Selfridge brands – after its own bid failed.  However, the deal collapsed after it emerged that Baugur had been raided by Icelandic police investigating allegations of fraud.  Rather than participating in the deal, Baugur sold its shares to Sir Philip, banking a £65m profit that helped finance a spending spree that saw the group buy stakes in a string of UK retailers including House of Fraser, Iceland, and Hamleys.  Sir Philip went on to make billions by turning Arcadia around — billions that would finance any buyout of Baugur.  Baugur's investments could fall “one after the other” unless it completes a deal with retail billionaire Sir Philip Green, the Icelandic group’s chairman admitted yesterday.  Jón Asgeir Jóhannesson said selling off assets, even at “firesale prices”, was better than letting its British investments, which include House of Fraser, Iceland and Hamleys, fail. His first priority was to save 55,000 UK jobs.  The rescue deal, under which Sir Philip would buy Baugur’s debt from the Icelandic banks and the Government – is reliant on the backing of both Icelandic and UK governments.  Sir Philip told The Daily Telegraph: “It is of the utmost importance that if we are going to do something it is done as soon as possible.”  Private equity executives, who have looked at parts of the Baugur business in recent days, believe that up to £2bn of Baugur’s borrowings now reside with the Icelandic government or Icelandic banks.  The estimate is in sharp contrast to public statements by the investment group which has insisted that the majority of debt is held by international banks.  Due diligence was continuing this weekend.
Even before Sir Philip Green’s G550 Gulfsteam jet had touched down in Iceland    – the retail entrepreneur had been spotted.