At 10.12 and 10.13 hours on 20 Nov, 1942, U-263 fired torpedoes at the convoy KMS-3 west of Gibraltar and observed hits after 13 seconds, 47 seconds, 1 minute 27 seconds and 1 minute 47 seconds. Nölke observed two ships sinking and one burning. In fact, the Prins Harald and Grangepark were sunk and one torpedo exploded in the net defences of the British steam merchant Ocean Pilgrim (7173 tons).

The Prins Harald (Master Westbye Foss-Sørensen) was hit by one torpedo that started a fire in a hold where some ammunition was stored. The crew launched the lifeboats and rowed away to a safe distance, while the motorboat remained near the ship to wait for the master and the first mate who attempted to extinguish the fire. After 30 minutes, the ship blew up and sank, spreading flames across the water. The two officers were killed and the men in the motorboat were blown into the sea by the pressure of the explosion. A British gunner was killed, while all the others had varying degrees of injuries. Eight survivors rescued themselves on a raft and two clung to some debris until a lifeboat came to assist. All survivors were picked up by the rescue vessel of the convoy and landed in Gibraltar after two days.