8. DEBT

Debt consisted of the following at December 31 (in thousands):

	SUCCESSOR
	2016			2015
Term loan	$	165,000		$	390,000
Capital lease		-			59
		165,000			390,059
Less unamortized discount		(534	)		(1,984	)
Less unamortized term loan debt issuance costs		(824	)		(10,134	)
Less current portion of long-term debt		(12,375	)		(59	)
Long-term debt, net, less current portion	$	151,267		$	377,882

Principal payments on debt are due as follows (in thousands):

2017	$	12,375
2018		16,500
2019		16,500
2020		20,625
2021		99,000
Total	$	165,000

The estimated fair value of the Company’s term loan based on Level 2 inputs using the market approach, which is primarily based on rates at which the debt is traded among financial institutions, approximates $164.5 million as of December 31, 2016, compared to the carrying value of $164.5 million. The estimated fair value of the Company’s 2014 term loan based on Level 1 quoted market prices approximated $386.3 million as of December 31, 2015, compared to the carrying value of $388.0 million.

2016 Credit Agreement

On December 8, 2016 (the “Closing Date”), Medpace IntermediateCo, Inc., as borrower (the “Borrower”), and Medpace Acquisition, Inc., a wholly-owned subsidiary of Medpace Holdings, Inc. (the “Company”), as parent guarantor (the “Parent Guarantor”), entered into a credit agreement (the “Senior Secured Credit Agreement”) consisting of a $165.0 million term loan (the “Senior Secured Term Loan Facility”) issued at 99.7% and a $150.0 million revolving credit facility (the “Senior Secured Revolving Credit Facility” and, together with the Senior Secured Term Loan Facility, the “Senior Secured Credit Facilities”). The Senior Secured Term Loan Facility and Senior Secured Revolving Credit Facility expire in December 2021.

The Senior Secured Credit Facilities provide for, at the Company’s option, interest at the Eurocurrency rate or Base rate for the Senior Secured Term Loan Facility and the Senior Secured Revolving Credit Facility borrowings. The Company, at its discretion, may choose interest periods of one, two, three or six months, which determines the interest rate to be applied. Interest on Eurocurrency loans continues to be payable at the end of the selected Eurocurrency term and interest on Base rate loans are payable quarterly in conjunction with any required principal payments.

Borrowings under the Senior Secured Credit Facilities bear interest at a rate equal to, at our option, either (i) the adjusted Eurocurrency rate based on LIBOR for U.S. dollar deposits for loans denominated in dollars, EURIBOR for Euro deposits for loans denominated in Euros and the offer rate for any other currencies for loans denominated in such other currencies for the relevant interest period plus an applicable margin from 1.25% to 2.25% based on the total net leverage ratio from less than 1.50:1.00 to greater than 3.75:1:00, or (ii) an alternative base rate (determined by reference to the highest of (a) the prime commercial lending rate of the administrative agent, as established from time to time, (b) the Federal Funds Rate plus 0.50% and (c) the one-month adjusted Eurocurrency rate for loans in U.S. dollars plus 1.00%) plus an applicable margin from 0.25% to 1.25% based on the total net leverage ratio from less than 1.50:1.00 to greater than 3.75:1:00. The applicable margin as of December 31, 2016 was 1.50% for eurocurrency loans and 0.5% for base rate loans. The Company may voluntarily prepay outstanding loans under the Senior Secured Credit Facilities without premium or penalty. As of December 31, 2016, the interest rate applicable on the term loan was the Eurocurrency interest rate of 2.15%.

In addition, the Company is required to pay to the lenders a commitment fee on a quarterly basis at an annual rate of 0.375% of the unused borrowings under the Senior Secured Revolving Credit Facility for the first full fiscal quarter after the closing date, and thereafter 0.50% if the total net leverage ratio is greater than or equal to 3.00:1.00, or 0.375% if the total net leverage ratio is less than 3.00:1.00. At December 31, 2016 the Company had no outstanding borrowings under the Senior Secured Revolving Credit Facility, resulting in $150.0 million in undrawn capacity available under the Senior Secured Revolving Credit Facility. In addition, the Company had $0.1 million in undrawn letters of credit outstanding, which are secured by the Senior Secured Revolving Credit Facility at December 31, 2016.

The original issue discount of $0.5 million related to the issuance of the Senior Secured Term Loan Facility was recorded as a reduction of the underlying debt issuances within Long-term debt, net, less current portion and is being amortized over the life of the debt using the effective-interest method. Per the terms of the Senior Secured Credit Term Loan Facility, principal is scheduled to be paid quarterly on the last business day of March, June, September and December of each year, beginning March 2017.

Origination fees of $0.8 million related to the Senior Secured Term Loan Facility were recorded as a reduction of the underlying debt issuances in Long-term debt, net. These fees are being amortized over the life of the debt using the effective-interest method. The unamortized portion of the origination fees related to the Senior Secured Term Loan Facility was $0.8 million at December 31, 2016. Origination fees of $1.6 million related to the Senior Secured Revolving Credit Facility were originally capitalized as a component of Other assets. These fees are being amortized over the life of the debt using the effective-interest method. The unamortized portion of the origination fees related to the Senior Secured Revolving Credit Facility was $1.6 million at December 31, 2016.

The Senior Secured Credit Facilities are guaranteed by the Parent Guarantor and its material, direct or indirect wholly owned domestic subsidiaries, with certain exceptions, including where providing such guarantees is not permitted by law, regulation or contract or would result in adverse tax consequences. The Senior Secured Credit Facilities are subject to customary covenants relating to financial ratios and restrictions on certain types of transactions, including restricting the Company's ability to incur additional indebtedness, acquire and dispose of assets, make investments, pay dividends, or engage in mergers and acquisitions. The Company is required to maintain a ratio of consolidated funded indebtedness minus unrestricted cash and cash equivalents (in the aggregate not to exceed $50 million and to include not more than $25 million of foreign unrestricted cash and cash equivalents) to consolidated EBITDA for the most recent four fiscal quarter period not to exceed 4.00:1.00; provided that the Company shall be permitted to increase the ratio to 4.50:1.00 in connection with any permitted acquisition or any other acquisition consented to by the Administrative Agent and the Required Lenders (as defined in the Senior Secured Credit Agreement) with total cash consideration in excess of $25 million. Such increase shall be applicable for the fiscal quarter in which such acquisition is consummated and the three consecutive test periods thereafter. The Company is also required to maintain a ratio of consolidated EBITDA to consolidated interest expense, in each case for the most recent four fiscal quarter period, of not less than 3.00:1.00. The Company was in compliance with all financial covenants as of December 31, 2016.

Borrowings under the Senior Secured Credit Facilities were utilized to repay and extinguish our obligations under the 2014 Senior Secured Credit Facilities (as defined below). In accordance with accounting guidance governing such transactions, upon closing the 2014 Senior Secured Credit Facility (as defined below) and commencement of the Senior Secured Credit Facilities, the Company recognized a loss on extinguishment of debt totaling $10.7 million, of which $10.2 million related to unamortized loan origination fees from the credit agreement for our 2014 Senior Secured Credit Facilities (as defined below) and $0.5 million related to third party fees incurred during the fourth quarter of 2016.

2014 Credit Agreement

On April 1, 2014, the Company entered into a credit agreement, consisting of a $530 million term loan (“2014 Senior Secured Term Loan Facility”) and a $60 million revolving credit facility ("2014 Senior Secured Revolving Credit Facility" and together with the 2014 Senior Secured Term Loan Facility, the “2014 Senior Secured Credit Facilities”). The 2014 Senior Secured Term Loan Facility, which was terminated in 2016 in connection with the new borrowings under the Senior Secured Credit Facility, was guaranteed by the Company and its subsidiaries and was subject to customary covenants relating to financial ratios and restrictions on certain types of transactions, including restricting the Company's ability to incur additional indebtedness, acquire and dispose of assets, make investments, pay dividends, or engage in mergers and acquisitions. The Successor was in compliance with all financial covenants as of December 31, 2015.

Borrowings under the 2014 Senior Secured Credit Facilities incurred interest at a rate equal to, at our option, either (a) a Eurocurrency rate based on LIBOR for U.S. dollar deposits for loans denominated in dollars, EURIBOR for Euro deposits for loans denominated in Euros and the offer rate for any other currencies for loans denominated in such other currencies for the relevant interest period, plus 4.00% per annum if our total net leverage ratio was greater than 4.75:1.00, or 3.75% if our total net leverage ratio was less than or equal to 4.75:1.00; provided that the relevant Eurocurrency rate was deemed to be no less than 1.00% per annum; (b) a base rate, which was defined as the highest of (i) the Federal Funds Rate on such day plus ½ of 1.00%, (ii) the Prime Lending Rate on such day, (iii) the Adjusted Eurocurrency Rate for loans denominated in U.S. dollars published on such day for an Interest Period of one month plus 1.00% and (iv) 2.00%, plus 3.00% per annum if our total net leverage ratio was greater than 4.75:1.00, or 2.75% if our total leverage ratio was less than or equal to 4.75:1.00; provided that the base rate was deemed to be no less than 2.00% per annum. The Company was able to voluntarily prepay outstanding loans under the 2014 Senior Secured Credit Facilities without premium or penalty.

In addition, the Company was required to pay to the lenders a commitment fee of 0.5% quarterly for unused commitments on the 2014 Senior Secured Revolving Credit Facility, subject to a step-down to 0.375% based upon achievement of a certain leverage ratio as defined within the 2014 Senior Secured Credit Facilities. As of December 31, 2015, the Company had met the requirements for the pricing level reduction. At December 31, 2015 the Company had no outstanding borrowings under the 2014 Senior Secured Revolving Credit Facility, resulting in $60.0 million in undrawn capacity available under the 2014 Senior Secured Revolving Credit Facility. In addition, the Company did not have any outstanding letters of credit, which were secured by the 2014 Senior Secured Revolving Credit Facility at December 31, 2015.

Origination fees of $15.5 million were originally capitalized related to the issuance of the 2014 Senior Secured Credit Facilities and were being amortized over the life of the debt using the effective-interest method. The unamortized portion of these fees related to the 2014 Senior Secured Term Loan Facility was $10.1 million at December 31, 2015 and was recorded within Long-term debt, net. The unamortized portion of the origination fees attributable to the 2014 Senior Secured Revolving Credit Facility was $1.3 million at December 31, 2015 and was recorded as a component of Other assets in the consolidated balance sheets.

Mortgage Notes Payable

Medpace entered into a mortgage contract with a European bank in 2006 related to the purchase of a laboratory facility in Leuven, Belgium. The Euro-denominated mortgage bore a fixed annual interest rate of 4.90%, required monthly payments of principal and interest, and had a final maturity of December 2021. The mortgage was secured by building and land and also required that Medpace maintain a cash balance held as collateral with the bank. During 2015, the mortgage was fully repaid and the Company received a full refund of cash collateral during the first quarter of 2016.