At 01.16 and 01.20 hours on 25 June 1942, U-404 fired torpedoes at a three-column convoy of ten ships about 75 miles east of Cape Lookout and sank the Nordal and Manuela.

The Manuela (Master Conrad G. Nilsen) as second ship in the center column was hit four minutes after Nordal had been hit about 1000 yards off the starboard bow. One torpedo struck on the starboard side amidships between the engine room and boiler room. The explosion opened a large hole in the hull and both rooms flooded quickly, causing a pronounced list to starboard. Within seven minutes, the eight officers, 28 crewmen and six armed guards (the ship was armed with one 4in and two .30cal guns) abandoned ship in one lifeboat and three rafts. After 30 minutes, the lifeboat, containing the master and 22 crewmen was towed by the US Coast Guard vessel USS CG-408 to HMS Norwich City (FY 229) and the survivors were taken to Morehead City, North Carolina. Eleven crewmen and the six armed guards were rescued from their rafts by the US Coast Guard vessel USS CG-483 and brought to the Naval Operating Base at Norfolk, Virginia. One officer and one crewman died on watch below.

The Manuela remained afloat and at 09.00 hours a salvage crew from the US Coast Guard vessel USS CG-252 boarded the ship to prepare her to be towed. They discovered one seriously wounded crewman on deck, who was taken to a hospital in Morehead City. The next day, the ship foundered while in tow to Morehead City.