"In the process of going from the yacht to the helicopter the beacon has fallen into the water," Mr Rendle said. "The beacon is still transmitting, but it's not on the yacht."
Mr Rendle said it was not known where the yacht was now, or even if it was still above water.
The vessel was part way through its journey when Maritime Radio reported a call at 2.30am on Friday that its engine had broken down 20 nautical miles (37km) east of White Island.
But Mr Rendle said that at 4.10am on Sunday, the pair sent out a mayday call after the vessel started taking on water and they found their pumps unable to cope.
Mr Rendle said the yacht's locator beacon was yesterday giving its position as about 47 nautical miles (87km) north of White Island.