TAIPEI (CNA) — A dramatic layoff plan sent shares in Chunghwa Picture Tubes Ltd. (中華映管股份有限公司), a Taiwanese maker of small and medium sized displays, into a tailspin March 12, dealers said.

The heavy selling emerged after Taiwan Stock Exchange warned that the financially-troubled flat panel maker, which has filed a bankruptcy protection plan with a district court in Taoyuan, will have to delist its shares regardless of whether the business restructuring plan is approved by the court or not, dealers added.

Shares in Chunghwa Picture Tubes lost 10 percent, the maximum daily decline, to close at NT$0.54 (US$0.017) on the main board with 3.93 million shares changing hands, while the weighted index soared more than 0.90 percent to end at 10,343.33 points on the back of a strong rebound staged by the bellwether electronics sector.

“The layoff plan caught many investors off guard and they rushed to dump the stock soon after the local equity market opened,” MasterLink Securities analyst Tom Tang said. After the plunge in its share price, orders to dump an additional 15 million Chunghwa Picture Tubes shares had been placed and were awaiting execution.

“The flat panel industry is encountering headwinds and market confidence in the industry is weakening,” Tang said.

On Monday, Chunghwa Picture Tubes announced it will lay off 2,000-2,500 employees by May 10 in preparation for restructuring. The company filed for bankruptcy protection in mid-December 2018.

According to the flat panel maker, the layoffs will account for 44.44-55.55 percent of its total workforce at a time when the global flat screen industry faces a supply glut.

About half of the affected employees will come from production lines, the company said, adding that having submitted the layoff plan to Taoyuan City Government, it will do everything it can to help affected employees land new jobs.

The layoff plan represents the latest workforce reduction at Chunghwa Picture Tubes, a subsidiary of Tatung Co. The company laid off 63 employees in December 2018 after it dismissed 65 in September.

In addition to the latest layoff, the flat panel maker said, it will also dispose of two 4.5 generation production lines or put them up for lease, but maintain its 6th generation production plant which is more efficient.

Huang Shih-chang (黃世昌), a spokesman for Chunghwa Picture Tubes, said the company will focus on small and medium sized screen production at its 6th generation plant, the operation of which requires more than 2,000 workers.

Rebecca Chen (陳麗卿), TWSE vice president, told the press that Chunghwa Picture Tubes will have to delist 40 days after it receives a bankruptcy protection ruling from the court.

Chen said if the business restructuring plan is rejected delisting is a sure thing due to the company’s dire financial situation, but if the plan is approved, the company will be restructured after delisting, and once that is completed apply for a new listing.

Chunghwa Picture Tubes was listed on the main board on Sept. 17, 2001.

According to the TWSE, the company’s total debt hit NT$84.51 billion as of the end of September 2018, up from NT$71.14 billion a year earlier.

In the first nine months of last year, the flat panel maker incurred NT$0.93 in net loss per share, compared with NT$0.47 in earnings per share over the same period.

By Pan Chih-yi and Frances Huang