At 11.49 hours on 3 Apr, 1942, the unescorted Otho (Master John Makkinje) was hit by one torpedo from U-754 about 200 miles east of Cape Henry, Virginia, while proceeding on a nonevasive course at 9.5 knots. The torpedo struck on the starboard side amidships directly below the stack at the bulkhead between the #3 tank and the engine room. The explosion severely damaged the vessel and caused her to sink after twelve minutes.
Most of the ten officers, 26 crewmen, ten armed guards and seven passengers abandoned ship within five minutes in three boats and a raft. Three officers, nine crewmen, one armed guard and three passengers were picked up by the American patrol yacht USS Zircon (PY 16) and landed at Cape May on 8 April. On 25 April, one crewman and five armed guards were picked up from a raft by the Norwegian motor tanker Gallia (Master Reidar Henriksen) about 150 miles west of Bermuda and landed in Halifax. When they were found, the survivors were too exhausted to move so that two men from the tanker had to jump overboard in order to help them. One of the armed guards died one hour after being picked up. The remaining survivors were never found, in all the master, six officers, 16 crewmen, five armed guards and four passengers were lost.