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s PT Kimia Farma (KAEF) is in urgent need of cash to support its expansion plans this year, the publicly listed pharmaceutical company is planning to issue bonds in the near future.

Finance director Arief Budiman said the debt papers, estimated to be worth Rp 1 trillion (US$103.2 million), would likely have a term of 10 years. “We cannot postpone the need for capital expenditure. Therefore, the target is to issue the bonds as soon as possible,” Arief said in Jakarta on Wednesday.

KAEF needs around Rp 1.3 trillion for capital expenditure in 2013 and 2014.

This year, the company needs Rp 660 billion to support its expansion, which includes the development of a new Rp 400 billion plant, a Rp 100 billion herbal medicine factory and the establishment of another plant producing contraceptive pills.

The company also aims to have up to 1,000 clinics nationwide by 2016. It already had 60 clinics as of the end of 2012.

KAEF is also in the process of raising money through a rights issue relating to its plan to take over PT Indofarma (INAF).

The INAF acquisition is the government’s attempt to consolidate the two pharmaceutical firms, with KAEF being the parent company.

KAEF is currently 90 percent owned by the government, while the remainder is owned by the public. Meanwhile, INAF is 81 percent owned by the government and 19 percent by the public.

KAEF is still awaiting approval from the House of Representative for the acquisition plan, consequently delaying the rights issue that would account for 35 percent of its enlarged capital.

Based on the number of shares and current share price, the rights issue could be worth around Rp 1.9 trillion.

According to KAEF’s president director, Rusdi Rosman, KAEF would acquire the government’s share in INAF. Rusdi added that his company would purchase INAF’s shares held by the public if they wanted to swap their ownership in INAF for KAEF.

The company would likely use funds from the rights issue to do this, Rusdi said. However, he added that the main purpose of the rights issue was to support the company’s expansion.

‘That’s why we call the bonds ‘alternative funding’. We may process the bond issuance of what will probably be continuous bonds. If the rights issue is approved, we will buy the bonds back,” Rusdi said.

KAEF still needs two government regulations: one for the acquisition and the second for the rights issue.