Statement to 2009 Exchangeable Bond Holders

British Aerospace PLC 15 December 1999 ANNOUNCEMENT TO HOLDERS OF £685,960,000 3.75 PER CENT. SENIOR UNSECURED EXCHANGEABLE BONDS DUE 2009 OF BRITISH AEROSPACE PUBLIC LIMITED COMPANY Holders of £685,960,000 3.75 per cent. Senior Unsecured Exchangeable Bonds due 2009 (the Exchangeable Bonds) of British Aerospace Public Limited Company (BAE SYSTEMS) are referred to the announcement made today by BAE SYSTEMS a copy of which is attached hereto. BAE SYSTEMS proposes to attempt to purchase additional shares in Orange plc (Orange) in the market for cash consideration in order that, upon exercise of its option to sell to Mannesmann, or upon exercise of Mannesmanns option to purchase from BAE SYSTEMS, some or all of its shares in Orange, the Exchange Property under the terms of the Exchangeable Bonds will be entirely comprised of shares in Mannesmann. If BAE SYSTEMS does not acquire enough additional Orange shares to achieve this in full, it may still sell some or all of its Orange shares to Mannesmann pursuant to the option and any cash forming part of the Exchange Property under the terms of the Exchangeable Bond will be dealt with as described in Condition 7(j) of the Exchangeable Bonds. BAE SYSTEMS has determined, in accordance with the provisions of Conditions 7(h) of the Exchangeable Bonds, that an adjustment should be made to the Exchange Rights under the terms of the Exchangeable Bonds to reflect the arrangements (and in particular that the Mannesmann shares arising from the acquisition of further Orange shares will form part of the Exchange Property, instead of any cash arising from acceptance of the Mannesmann offer for Orange being used to acquire further Mannesmann shares or gilts pursuant to Condition 7(j) of the Bonds after the event) and The Law Debenture Trust Corporation p.l.c. (the Trustee) has given its prior written approval to such determination. In accordance with Condition 7(h) of the Exchangeable Bonds, an independent investment bank of international repute selected by BAE SYSTEMS and approved in writing by the Trustee has determined in good faith acting as an expert, that the adjustment referred to above to the Exchange Rights is fair and reasonable. A further announcement will be made by BAE SYSTEMS in the event that the composition of the Exchange Property changes. Dated: 15 December 1999 BAE SYSTEMS HOLDING IN ORANGE British Aerospace Public Limited Company (BAE SYSTEMS) and Mannesmann Aktiengesellschaft (Mannesmann) have today entered into arrangements (the arrangements) pursuant to which BAE SYSTEMS has an option to sell to Mannesmann, and Mannesmann has an option to purchase from BAE SYSTEMS some or all of its holding of shares in Orange plc (Orange). As at 14th December, 1999, BAE SYSTEMS owned 59,961,548 shares in Orange. Orange provides a range of communication services, its core activity being the operation of the Orange digital wirefree network in the UK and the sale and marketing of Orange products and services both in the UK and internationally. Under the terms of the arrangements, the consideration for the sale and purchase of the Orange shares will be equivalent to the basic terms of Mannesmanns offer for Orange of 0.0965 Mannesmann shares and £6.40 in cash for each Orange share (which, based on BAE SYSTEMS current holding of shares in Orange would be 5,786,289 Mannesmann shares and £383,753,907 in cash).

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BAE Systems (BA.)
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