New Report: Profit Over Safety: Private Equity’s Leveraged Bet on Packers Sanitation
The Private Equity Stakeholder Project released a new report, Profit Over Safety: Private Equity’s Leveraged Bet on Packers Sanitation, detailing how The Blackstone Group’s Packers Sanitation Services Inc (PSSI), which specializes in cleaning food processing plants, has stood out as a dangerous workplace even as Blackstone and Packers’ previous private equity owners have collected hundreds of millions of dollars in dividends from the company. Since May 2018, when Blackstone acquired PSSI, the US Occupational Safety and Health Administration (OSHA) has conducted investigations of at least four amputations and three fatalities of PSSI employees, including a decapitation.
In July 2021, the US Department of Labor’s Occupational Safety and Health Administration (OSHA) cited Packers Sanitation Services Inc, and three other companies in connection with a nitrogen leak that tragically caused the deaths of six workers and injured almost a dozen others at a Georgia poultry processing plant. PSSI is contesting the charges.
According to a 2017 report by the National Employment Law Project (NELP) looking at OSHA severe injury data, PSSI stood out as a particularly dangerous workplace with one of the highest numbers of serious injury reports compared to its relatively small number of employees.
PSSI employees have suffered severe occupational accidents in the three years that the Blackstone Group has owned the company, and PSSI has been levied hundreds of thousands of dollars in fines by OSHA during that period.
For its first 34 years, PSSI was privately owned, changing hands between individual owners and smaller investment groups. Since 2007, PSSI has been through a succession of private equity owners. Leonard Green & Partners and AlpInvest Partners purchased PSSI in 2014, and The Blackstone Group bought PSSI in 2018.
Blackstone and Leonard Green/ AlpInvest have extracted hundreds of millions of dollars from PSSI through debt-funded dividends. The private equity firms added debt to Packers Sanitation’s balance sheet in order to collect dividends for themselves. Packers Sanitation paid Leonard Green and AlpInvest a $340 million in debt-funded dividend in December 2017. 
Packers Sanitation paid a $135 million dividend in June 2019 and another $297 million dividend in November 2020 to the Blackstone Group.
The Blackstone Group has since loaded PSSI with $350 million in debt financing in November 2020, refinanced the company’s $1.1 billion in debt in February 2021, and added another $185 million in debt financing in August 2021.
In Bloomberg Businessweek’s 2017 investigation, “America’s Worst Graveyard Shift is Grinding Up Workers,” David Michaels, head of OSHA during the Obama Administration, suggested that high debt is a potential red flag, “Are they reducing the costs to pay debt by pressuring workers to work faster? That’s a common danger with highly leveraged companies.”
The private equity industry must correct its course on how it treats workers. Focused on growing cash flows at the companies they buy, private equity firms have often taken a low road approach and sought to reduce wages, benefits, and staffing at firms they acquire – with devastating consequences to thousands of workers, their families and their entire communities. The industry manages nearly $7.5 trillion in assets and owns companies that employ more than 11 million American workers, plus millions more around the world. It can afford and must invest in its workforce. The nation’s private equity firms must institute a set of standards to improve working conditions at the portfolio companies that they own.
 Information was gathered from two OSHA databases; “Enforcement Cases with Initial Penalties of $40,000 or Above | Occupational Safety and Health Administration.” Accessed August 18, 2021. https://www.osha.gov/enforcement/toppenalties; and “Establishment Search Page | Occupational Safety and Health Administration.” Accessed August 18, 2021. https://www.osha.gov/pls/imis/establishment.html. USDOL/OSHA Establishment Search Results between January 1, 2018 – August 18, 2021 resulting in 49 results. It should be noted that some inspections may still be open or were incomplete. This list only reflects 12 most serious accidents as reported to OSHA and not a claim of guilt or innocence.
 US Department of Labor Cites Foundation Food Group Inc., Three Other Companies after Jan. 28 Investigation Finds Six Deaths Were Preventable | Occupational Safety and Health Administration,” July 23, 2021. https://www.osha.gov/news/newsreleases/national/07232021.
 PSSI. “About Us | PSSI Food Manufacturing Sanitation Services.” Accessed September 2, 2021. https://www.pssi.com/pssi-homepage/about/about-pssi/.
 “The Blackstone Group Acquires Packers Sanitation Services | Mergr,” May 2018. https://mergr.com/the-blackstone-group-acquires-packers-sanitation-services.
 Moody’s affirms PSSI’s B3 CFR upon a refinancing/dividend transaction; outlook stable,” Moody’s, Nov 6, 2017, https://www.moodys.com/research/Moodys-affirms-PSSIs-B3-CFR-upon-a-refinancingdividend-transaction-outlook–PR_374774.
 Moody’s affirms Packers Holdings’ B3 CFR following dividend recap; outlook stable,” Moody’s, May 2, 2019, https://www.moodys.com/research/Moodys-affirms-Packers-Holdings-B3-CFR-following-dividend-recap-outlook–PR_401554. “Moody’s says Packers Holdings’ term loan add-on is credit negative,” Moody’s, Nov 17, 2020, https://www.moodys.com/research/Moodys-says-Packers-Holdings-term-loan-add-on-is-credit–PR_436355.
 “Pitchbook Profile re:Packers Sanitation Services Debt.” Accessed September 2, 2021. https://my.pitchbook.com/profile/10503-28/company/profile#deal-history/159779-26T