Barely two weeks ago, mining and commodity trading giant Glencore placed an offering of more than 1.3 billion new ordinary shares at 125 pence per share (about $1.90) with existing and new institutional shareholders, as well as certain company officials and employees. Those shares — and more than 13 billion others– closed at 68.62 pence per share in London on Monday, down 29% from Friday’s close.

Although the shares rebounded to a high of around 76 pence Tuesday morning, there is little doubt that Glencore is reeling. The recent share offering raised $2.5 billion that the company planned to use to reduce its debt burden of some $30 billion, most accrued in its acquisition of Xstrata. Glencore planned to raise $10.2 billion in cash and cut the company’s debt by a third by the end of next year. To that end, the company also suspended about $2.4 billion in dividend payments.

The prognosis is not encouraging. Bloomberg cited an analyst from Jefferies, who said:

Glencore is now under pressure to strengthen its balance sheet via asset sales or a capital injection, and time is of the essence. There is value in Glencore shares if the company can pull the appropriate levers now, but risks are clearly very high.

Another analyst at research firm Investec is not so sanguine. He told the Financial Times:

If major commodity prices remain at current levels, our analysis implies that, in the absence of substantial restructuring, nearly all the equity value of both Glencore and Anglo American could evaporate.

When Glencore announced its acquisition of Xstrata, the value of the combined companies was estimated to be north of $70 billion. Can that much value evaporate in just over three years? We’re about to find out.

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