Titanium Metals Corporation (TIMET) is one of the world’s leading producers of titanium products. In November 2012, it was announced the company was being purchased by Precision Castparts, a diversified manufacturer of complex metal components and products. In TIMET’s annual report, prior to its acquisition by Precision Castparts, the company disclosed the following:

Discuss why TIMET’s U.S. lenders would impose such restrictions on the company. Discuss why TIMET would agree to such restrictions.

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Under the terms of the company's U.S. asset-based revolving credit agreement, borrowings are limited to the lesser of $105 million or a formula-determined borrowing-base.... Borrowings are collateralized by substantially all of the company's U.S. assets. The U.S. credit agreement prohibits... the payment of dividends on the company's common stock..., limits additional indebtedness, requires compliance with certain financial covenants including a minimum net worth covenant and a fixed charge ratio covenant....