Inside Business

Last week I showed a video from the ABC show Inside Business. Alan Kohler interviewed Chip Goodyear and Marius Kloppers from BHP Billiton. I thought the interview was a good demonstration of how "real world" business people thought about dividend payout ratios, mergers, and corporate finance in general. This week's show featured an interview with Grant King from Origin Energy. Much of the interview covers the financial incentives required to reduce carbon emissions, but one part of the discussion was quite relevant to corporate finance. When asked whether Origin would be investing directly in alternative energy sources, Mr King responded:

You tend to find these assets are geared up essentially in a sort of financial manner, much more highly geared than our balance sheet, so whether we put them on our balance sheet or they sit on someone else's balance sheet is a capital structure issue and efficiency of capital issue...

How does this statement compare to the conclusions on capital structure made by Modigliani and Miller? And what M&M assumption violations would lead to this statement being a correct statement on capital structure?