Conversion of Securities

BAE SYSTEMS PLC
08 June 2007


BAE SYSTEMS plc

7.75p (net) Cumulative Redeemable Preference Shares of 25p each in the capital
of BAE Systems plc ('Preference Shares')

NOTIFICATION OF CONVERSION OF ALL OUTSTANDING PREFERENCE SHARES

As at the final conversion date for the Preference Shares of 31 May 2007,
holders of  Preference Shares elected to convert 257,152,626 outstanding
Preference Shares into fully paid ordinary shares of 2.5p each in the capital of
BAE Systems plc ('Ordinary Shares') at the pre-determined conversion rate of
0.47904 Ordinary Shares for every Preference Share.

As permitted by the Company's Articles of Association and as a result of the
conversion of 75 per cent. or more of the Preference Shares, BAE Systems
confirms that it has elected to require the conversion of the remaining
2,810,283 Preference Shares outstanding. As prescribed by the Company' Articles
of Association, the conversion will be on the same terms as the conversion that
took place on 31 May 2007.  The outstanding Preference Shares will therefore not
have any entitlement to the half-yearly Preference Share dividend previously
notified as payable on 2 July 2007, nor will any future Preference Share
dividend be payable.

Holders of the outstanding Preference Shares will shortly be notified by the
Company of the arrangements for conversion.

8 June 2007



                      This information is provided by RNS
            The company news service from the London Stock Exchange