JAKARTA -- A bitter battle has broken out over leadership at one of Indonesia's major property developers Kawasan Industri Jababeka, which threatens to pitch the group into default.

The Jakarta-listed company's shares have been suspended after they dropped sharply on the announcement late last week that it could be forced to buy back US$300m in bonds due in 2023. The claim was made by incumbent president Budianto Liman, who was demoted by shareholders at the annual meeting on June 26. 

Liman has said the appointment of a new president director, Soegiharto -- who was voted in with the backing of a little-known local investment firm and the international Islamic Development Bank -- would trigger a change of control clause forcing Jababeka to buy back the bonds.

"We are unable to buy back the notes, because we do not currently have [enough] cash to make the purchase," said Liman.

Soegiharto, a former minister of state-owned enterprises who goes by one name, has dismissed the claims and is preparing to take on his new role within the next two weeks.

But the claim is being taken seriously by credit ratings agency S&P Global, which has put Jababeka on negative watch.

"Even partial repayment" of the notes could "considerably pressure the company in light of its financial resources," S&P said in a statement to Nikkei Asian review. "As of March 31, 2019, the company had about $60 million cash balance and we forecast [its] full-year operating cash flow to be marginally positive at close to $10 million."

The ratings agency also noted that Jababeka's options for refinancing the $300 million of notes are "limited" as it "does not have a track record of securing such an amount of long-term loans through domestic banks."

Jababeka was founded in 1989 and has several government projects in its portfolio. Should the company default, the impact would be "significant," according to an industry insider, because of its involvement in various large-scale development projects, and its partnerships with multiple international companies. But the effect on daily operations in industrial parks would be limited, he said.

Jababeka claimed in a press conference on July 8 that the investment firm Imakotama Investido and the Islamic Development Bank, which together hold just over 17% of the company, "acted in concert" with other shareholders at its annual meeting to vote in Soegiharto as the new president director. The motion was confirmed by 52% of the vote, with incumbent president director Budianto Liman demoted to director.

"We believe the process of the shareholders meeting was not carried out in accordance with the rules," said Liman, adding that he and the company "are victims" of behind-the-scenes plotting. Jababeka is investigating whether all procedures related to the management change were carried out properly.

Soegiharto told the Nikkei Asian Review that his appointment did not breach the "change of control" clause. He argued that the clause only kicked in if a majority of the board of directors changed from the date the notes were issued. His election did not prompt such a change, he said. He added that his appointment also does not mean a change in share ownership, because Mu'min Ali Gunawan, founder of local conglomerate Panin Group, remains the company's biggest shareholder.

"The appointment ... is purely the desire of the majority of public shareholders for Jababeka to perform better and improve governance to positively impact all the shareholders," Soegiharto said. It was "very unusual conduct for the management to be against the shareholders' desire," he added.

Although shares in the company reached 318 rupiah per share before the default risk was flagged -- the highest since August 2017 -- the company's net income has fallen for two consecutive years. Last year's net profit of 41 billion rupiah ($2.9 million) was less than one-tenth of the 436.6 billion rupiah logged in 2016, according to FactSet.

Trung Nguyen, senior credit analyst at research company Lucror Analytics, suggested that the threat of default had been exaggerated. If the clause was triggered, he said, the company "simply needs to obtain a consent waiver for the breach, which can be sweetened with a small fee."

"It is not in the noteholders' interest to push for the company to buy back the bonds and potentially default, which would likely result in a highly complex situation, with low recoveries on the bonds," he said.

Nikkei staff writers Bobby Nugroho and Ismi Damayanti contributed to this report.