At 05.30 hours on 6 Feb 1942 the unescorted and unarmed Halcyon (Master Peter Petrone) was attacked with gunfire by U-109 while steaming on a non-evasive course at 9 knots about 300 miles east-northeast of Bermuda. The U-boat had first sighted the ship nine hours earlier while heading for a rendezvous with U-130 (Kals) and postponed the refueling operation to chase the ship, but missed with one torpedo in a submerged attack at 00.07 hours and with the last torpedo fired in a second attack on the surface at 02.41 hours. Both apparently passed underneath the vessel as she was not loaded and weren’t noticed by the crew. U-109 then waited for the moon to rise before opening fire with the deck gun from a distance of about 3500 meters on the starboard quarter of Halcyon. The fourth round struck amidships underneath the funnel and soon a fire was started on the stern by further hits with incendiary rounds. The ship immediately turned away and tried to escape at full speed when taken under fire, incorrectly sending RRR wireless messages that warned other ships in the vicinity about a surface raider. The U-boat followed her movements and continued to shell the ship from distances between 2000 and 1200 meters, but a long swell made aiming difficult. Nevertheless approximately 30 hits were observed before the vessel stopped. Due to the darkness the Germans could not see how the crew abandoned ship in both lifeboats within 10 minutes at about 06.00 hours. However, a shell hit the port boat when it was still alongside the ship, killing two crewmen, wounding three others and opening a hole of about 3 feet long that had to be covered with canvas to prevent it from sinking. Both boats rowed away as fast as they could to escape the continuous shelling. The U-boat only ceased fire after having fired 100 rounds in one hour and went closer to examine the target, which was burning aft and had developed a heavy list to starboard. As she only had settled a bit by the stern, the U-boat opened fire again with the deck gun and the 37mm AA gun at her port side. U-109 went around the stern to the starboard side when the list of the ship increased to 30° and fired the last 20 rounds for the deck gun into the stern of the steamer from a distance of less than 500 meters. In addition 50 rounds were fired with the AA gun from aft to the bow into the side along the waterline. Bleichrodt investigated the Halcyon by circling her a last time and saw that the superstructure was completely devastated, that the side plates looked like a sieve and the stern was burning fiercely. The U-boat then left the area after having fired 200 rounds from the deck gun with approximately 60 hits and having used about 60 rounds for the 37mm AA gun. At 07.45 hours, the ship capsized to starboard and sank by the stern.

The master had left the Halcyon as last man with eight others in the starboard lifeboat and heard cries for help from the water, but had to leave the man behind as shrapnel was passing their boat very closely. The occupants of the boats observed the U-boat moving around at the sinking position, obviously searching for survivors, but unable to find them due to the darkness it eventually left. The next morning, a PBM Mariner flying boat (VP-74 USN, P-12) from Bermuda arrived at the scene, circled the lifeboats and flew off to attract the attention of the nearby British motor tanker British Prestige (Master E.W. Hills) and directed the ship to both lifeboats and two rafts. At 17.25 hours, the 15 survivors in the boat of the chief officer were picked up. Three of them, the chief officer, second engineer and one sailor were injured by shrapnel. The master and eight others in the starboard lifeboat were picked up after about one hour. At 20.20 hours, two further survivors were rescued from a raft and a last man was picked up from a second raft at 21.48 hours. On 10 February, the survivors were landed at Halifax and the three injured men taken to a hospital.