SLEEPING EASY
Mattress Firm’s Kindel Nuno leads the retailer through crises and minefields
Mattress Firm General Counsel Kindel Nuno does not mince words about December 2017 — a time, as she puts it, “the world came crashing down.”
“It was horrible — among the worst days of my professional career,” she said. “It was the moment inmy career that the bottom fell out.”
The Houston-based retailer, which operated 3,200 stores and generatedmore than $3 billion in revenues, faced difficult financial issues and needed to finalize an asset-based revolver as a new line of credit just to meet payroll.
The crisis came as a result of actions by Mattress Firm’s parent company, Steinhoff International Holdings, 8,627 miles away in South Africa, that had nothing to do with the bedding giant.
Steinhoff had been accused of amassive accounting scandal that was being called the Enron of South Africa, and Mattress Firm’s lenders in Europe cut off credit to the subsidiary as a result.
“Our (senior vice president) of finance told me earlier that week that we needed to get the credit facility in place within a week or we wouldn’t make payroll,” Nuno said. “If we didn’t get it done in time, we would need to shutter our stores the followingWednesday — theWednesday before Christmas.”
“Those days leading up to closing were extremely dark for a few of us,” she said.
The deal came together, in part due to the trust of a former lender, and Mattress Firm met the deadline to cover payroll by less than half an hour.
Disaster avoided. But 10 months later, the nearly inevitable occurred.
Nuno and her team played a critical role in guiding the bedding giant through a complex multibillion-dollar corporate restructuring using the Chapter 11 bankruptcy process, which allowed the company to close unprofitable stores, restructure debt and exit bankruptcy with more than $500 million in financing for future growth.
“Kindel doesn’t get rattled,” said Haynes and Boone partner Mark Tidwell, who has represented Mattress Firm in several litigation matters. “She stays calm and focused and works through whatever challenge comes along, playing the long game.”
And the legal challenges at Mattress Firm have definitely required a long game.
Since joining Mattress Firm in 2012 as the company’s first inhouse lawyer, Nuno has led the company through numerous largemerger and acquisition transactions.
In 2014, the company purchased competitor Sleep Train for $425million. The next year, it acquired Sleep America for $12.5 million.
In February 2016, Mattress Firm closed its acquisition of Sleepy’s for $780 million.
Five months later, Nuno and her team found themselves in an unfamiliar spot. Publicly traded Mattress Firm was targeted for acquisition by Steinhoff, which owned several large home furnishing chains across Europe. The transaction closed in September 2016 for $3.8 billion.
In all, Nuno has worked on more than 25 M&A deals for Mattress Firm.
“It is somany, I’ve lost count,” she said.
Early years
Born in Houston, Nuno grew up in Sugar Land. Her father, Joe Elam, went to work for Exxon’s legal department when he graduated fromLSU’s law school in 1973, retiring in 2005.
Besides her father, Nuno has two uncles and an aunt who are lawyers. Still, she wanted to be a farmer and then a veterinarian. She even went to Texas A&M’s veterinary summer camp.
“Growing up, I never wanted to be a lawyer,” Nuno said. “I loved to argue and did so often, but I chalk that up to stubbornness, which is definitely a family trait.”
“By the time I reached college, I’d switched again — biomedical engineer so I could build prosthetic limbs,” she said. “When I declaredmy majors of psychology and political science, my father calledme.”
“Well, what grad school are you going to go to?” Elamasked his daughter. “Because you can’t get a job with those majors.”
Nuno’s sister was already in medical school, so she didn’t want to follow her footsteps. “Law school,” she answered.
Nuno graduated fromthe University of Texas School of Law in 2004 and went to work in the corporate department at Fulbright & Jaworski — now Norton Rose Fulbright.
Secondment in Japan
In December 2004, Nuno worked on three separate deals on three different continents — Asia, Europe and North America.
“It wasmy first 96-hour workweek,” she recalls proudly. “We could go home and shower, but we had to be back in 20minutes. It was exhilarating and it pre
“Kindel doesn’t get rattled. She stays calm and focused and works through whatever challenge comes along, playing the long game.”
Mark Tidwell, Haynes and Boone partner
paredmy stamina and endurance for what was ahead ofme at Mattress Firm.”
In 2010, Nuno got the opportunity of a lifetime. Mitsui, a giant Japanese trading house and client of Norton Rose Fulbright, awarded the firm a one-year secondment for one of its lawyers. The law firm selected Nuno.
“I lived outsidemy comfort zone to the extreme during those first few weeks,” she said. “I was there during the earthquake and tsunami that hit in March 2011 — that’s a whole story in itself. By the end ofmy one-year stint, however, I didn’t want to leave.”
Nuno was entering her eighth year at Norton Rose Fulbright and debating whether to seek partnership in the next year. Then, an unexpected door opened. Mattress Firm, Nuno’s longtime client, went public in 2011 and sought its first general counsel.
“I formally interviewed with the CEO and CSO and was awarded the role as the founding member of the Mattress Firm legal department,” she said. “It’s been a wild ride ever since.”
During the eight-plus years that Nuno has been with Mattress Firm, she has led nearly twodozen transactions. Three of the deals effectively doubled the size of the business.
“Our acquisition of Sleepy’s in the Northeast was likely one of themore important, if not the most important,” she said. “That acquisition added over 1,000 stores to the chain and achieved our strategic goal to be the first border-to-border, coast-to-coast mattress specialty retailer.”
Nuno also points to two betthe-company litigation matters that Mattress Firm has faced during her tenure as general counsel.
The first was a labor and employment lawsuit alleging age discrimination brought by the Equal Employment Opportunity Commission against Las Vegasbased Bedtime Mattress, a matter that arose because of Mattress Firm’s purchase of Bedtime in 2007.
The second was Mattress Firm’s litigation in 2017 against Tempur Sealy.
“The case was seminal in that it was the first time we stood up for ourselves against a vendor who we believed was taking advantage of their power over retailers,” Nuno said. “But I look at our case brought by the EEOC in Nevada as the most important to me personally. The discrimination claims were baseless, and we stood our ground for over eight years refusing to take what I considered to be a plea bargain.”
The EEOC complaint was filed in 2011, a lawsuit was brought in 2013 and the litigation was dismissed in 2016.
The successes and growth continued through 2016 when Mattress Firm was acquired for $3.8 billion by global retail giant Steinhoff. There seemed to be nothing but smooth sailing ahead. Then came Christmas 2017.
‘World came crashing down’
Mattress Firm had justmade a payment to a European affiliate and was waiting for the cash to come back, which was normally no problem for a business with such great assets and a rich parent company’s support.
But Steinhoff’s CEO resigned that week amid reports that executives at the corporate giant had committed accounting fraud amounting to an estimated $7 billion by inflating profits and asset values.
The company’s stock plummeted. The international media called Steinhoff “the Enron of South Africa.”
The news caused financial institutions normally ready to do business with Mattress Firm to step back. Without a new line of credit, Mattress Firm would shutter its stores and thousands of people would be suddenly out of jobs just days before Christmas.
Nuno and the team got an asset-based loan in place in less than 10 days.
Even as one crisis was averted, another loomed. Nuno and her team advocated filing for bankruptcy protection so the company could restructure its debt.
“By late August 2018 the board gave us the green light to prepare,” Nuno said. “We were still digesting the Sleepy’s acquisition, had converted three brands into one, had lost our primary supplier, had toomany overlapping retail stores at high occupancy rates and had significant negative EBITDA.
“We were highly leveraged in a capital structure that wouldn’t allow for new debt to come in, and our crumbling parent company didn’t want to sell,” she said.
For five weeks, Nuno and her team negotiated tirelessly.
“I hardly slept the final week — in fact, didn’t sleep for 72 hours from Oct. 2 to Oct. 5 — andmy peers considered me crazy because I was juicing that week as well,” she said. “We were supposed to file on Oct. 3, but the creditors and our parent company couldn’t reach agreement on a few points.”
By the night of Oct. 4, Mattress Firm and its creditors were still at odds. Separately, critically important creditors in London that needed to consent to the deal were on the verge of backing away.
“I finally hung up on the lender group telling them that we were going to prepare for a Chapter 7 filing for the next day — we wouldn’t make it through the weekend and Monday was a bank holiday, so the courts were closed,” Nuno said. “After a couple hours, they called back, and we were moving forward.”